I was back in Texas for a funeral. The cemetery is out on what I call “the old home place,” the family farm. My cousin Neil farms it, but it is mostly raw land now. We talked about farming: what he is putting in and why, what he thinks he will get out of it.
Most of the farms in his area are big, 500 to 2,000 acres, and isolated from major urban areas. An acre is about the size of a football field if you cut out both end zones. When I asked him why farms in his area are so big, he had an answer: “Small farmers can hardly make it out in the rural areas as truck farmers. Way back when, they could; but we were just feeding the local area or maybe the state. Now we are feeding the world.” Farms are big because farming has become big business.
The Hudson Valley on both sides of the river is awash in small farms, some 5,300. Dutchess County contains some 650 farms, Ulster about 500. By some estimates the total acreage is over 659,000 acres in the Valley area; yet farms and acreage are declining. The average Hudson Valley farm is estimated to be about 150 acres, with some as small as a couple of acres and some as big as 2,000 acres. Farmers have cattle, ducks, chickens, goats, sheep and a wide variety of crops: vegetables, corn, lettuces, berries and of course apples. Dairy farming and apple production are still the kings in the Valley.
If farming is such big business – if farms are getting bigger, yet we are losing farms – why do we have so many small farms, and what are they doing? Whom does the Hudson Valley feed, and how do they do it? I decided to investigate.
For my investigation I spoke to Cornell, studied material from the International Federation of Organic Agriculture Movements, read reports from Glynwood and the Farm Bureau; but mostly I talked to farmers. I purposely eliminated the apple-growers so I could concentrate on small operations. I visited ten small operations, and spoke to more. I wanted to know what they were doing, how are they surviving, what innovations are occurring, what are the big challenges and what does the future hold. What I found out could supply more than I can put into one article. All in all, the state of agriculture in the Hudson Valley is quite healthy.
What is a farm?
Farms are businesses that use land to produce a marketable product that the farmer can sell at a profit. The farm business is a low-margin business. After taxes, a farmer, if he or she has done everything perfectly, will take home six cents on every dollar. Should anything go wrong, that margin is wiped out. Six cents on a dollar does not leave much room for error.
The state of New York once stated that farms had to be a minimum of ten acres and generate a minimum of $10,000. Now it is one acre and $1,000, yet we still see farms go under.
The challenges are well-known: weather, crop failure, pests. It truly is a gamble, and it is tough to find financing. Money drives everything, including land acquisition.
Some farmers, like Ray McEnroe, were born into a family who farmed. His farm was already established, but he still had to purchase it from his parents. Without the advantage of family-owned property, he told me, it would be impossible to start today.
He is right: Farms now sell at an average of $17,000 per acre. With a 100-acre farm, the investment in land only is $1,700,000. A ten-acre farm costs $170,000. This does not include the buildings, operating capital, machinery, seed or feed. How many banks will fund a $170,000 mortgage, plus another $100,000, on a business that might not make it one year? That is why much of the land formerly used for agriculture is now being developed for residential use, with subdivisions and “estates” replacing the farm.
In addition to the financing issue, some current small farms are pieces of former large farms that the current operator has revived and put back into production. That is no easy proposition, financially and practically. Jay Armour at Four Winds in Gardiner said that when he and his wife Polly bought their farm – a former dairy farm that was no longer producing – they needed to begin from scratch, weeding and working just to get the land into plantable condition. Ten years later, they now have a 24-acre farm, with four acres growing vegetables organically.
Another challenge that farmers face is the retail market. Retail markets are driven by consumers. Consumers will only pay for things within a small range. Consumers will buy broccoli at $1.69 per pound but not at $4, asparagus at $1.99 per pound but not $5. So at $2 per pound to the consumer, a retailer needs to make some profit, and will buy it from a distributor for, say, $1.75 per pound. A distributor will purchase it from a wholesaler at $1.25 per pound, and a wholesaler from the farmer at 75 cents per pound. This price difference from farmer to consumer is called the retail spread, and a farmer selling produce gets a percentage of the spread. Sometimes it is as little as 20 percent. Often it is not profitable for a small farmer to sell to a distributor, as the purchase price is under his production price and he cannot grow enough to make it profitable: an economy-of-scale problem.