Economy: The Farm Business

It’s not just the money. It’s the land. The announcement in December of the purchase of the 1255-acre Gill Farm on the Hurley Flats for $13 million by the New World Foundation appears to be one of those once-in-a-lifetime blockbuster moves which will mark a major turning point for Hudson Valley’s agricultural economy. As surely as the building of the Ashokan Reservoir a century ago to export a needed resource to New York City proved a watershed moment in Ulster County’s subsequent history, this carefully considered investment, executed properly, could be the historic cornerstone move in accelerating the transformation of a large monocultural form of cultivation harvested by migrant workers into a more intimate relationship with the huge metropolitan market to its south.

At least that’s the plan. For Ulster County agriculture, it’s a very big deal.

A change in ownership of even so large and historically significant land parcel is not of itself all-important, even if it involves so deep-pocketed a person as Peter Buffett, son of the fabled Warren, sage of Omaha. At least equally significant is what the new owners plan to do with it. There’s a broad-reaching plan to establish an incubator for farm training on the land, to strengthen existing agricultural institutions, and to strengthen the chain of resources between farmer and consumer.

Director of the Local Economies Project (LEP) for the New World Foundation Bob Dandrew predicted the week before last that the acquired property would become the largest farm hub and agricultural incubator in the country. He said he expected the first trainees would begin work in two years. “It was very clear that the Hudson Valley was the place to dive in and start this work,” Kingston Times reporter Jesse Smith last week quoted Dandrew as saying.

Creating a home-grown industry based on fresh locally grown foods dependent on a foodie culture is nothing new, of course, even in America. Northern California, which has been doing that for more than 40 years, has built a whole lifestyle around the movement. The approach has now gone national in a big way. Farmers’ markets abound in both rural and urban places, and no self-respecting large farm would be caught without a farmstand or two.

The 2012 American Community Survey indicated that only an estimated eleven out of every thousand persons in the Ulster County labor force over 16 years old worked in agriculture (934 persons). That’s not very many. But the social, cultural and historical value of agriculture makes farmland a priceless asset. And there is no more productive farmland in Ulster County than the deep alluvial soils left by the overflowing creekbed of the Esopus Valley.

The money for the purchase had to come from somewhere, and it did.

IRS records indicate that the Buffett-family-controlled Novo Foundation, which is in the $250-million asset class, has been a generous contributor to the much smaller New World Foundation, whose interests are quite wide and assets are in the $30-million range. Novo is New World’s most significant source of support. In the past five years Novo has given New World six or seven million dollars a year in grants for the latter foundation’s various programs, including LEP, which will be running the Hurley holding.

The Novo Foundation is no stranger to other Hudson Valley investments. Its original half-million-dollar annual grant to Hawthorne Valley Farm has been boosted to a million dollars. In alignment with the Gill purchase, Novo money has more recently supported Cornell Cooperative Extension of Ulster County, the Rondout Valley Growers Association (RVGA) and the Hudson Valley AgriBusiness Development Corporation.

Novo’s main source of capital consists of 1210 shares of Class A common stock in Berkshire Hathaway, Warren Buffett’s holding corporation. At the end of 2009 the shares were worth about $100,000 each. On December 27 of this year they were being sold for about $175,000 each. In 2013, Novo also reporting 440,228 shares of the much less pricier Class B Berkshire Hathaway stock, priced on Yahoo at $118 per share on December 27.

Co-chairs at Novo are Peter Buffett, who according to the IRS statement works there at no pay ten hours a week, and his daughter Jennifer, who works full-time for total compensation approaching $250,000 (very modest considering the foundation’s asset size). The Buffetts do not seem to be using Novo as their personal cash cow. It’s quite the opposite.

Warren Buffett is listed as Novo’s sole contributor in 2012. He gave $53 million. It is impossible not to speculate that there may be more where that came from.

As submitted to the IRS, the New World Foundation’s LEP explains the organization’s commitment to community-building. This earnest statement is worth quoting extensively: “The Local Economies Project subscribes to an innovative approach to sustain able economic development known as ‘local living economies.’ Local ownership of business and import substitution, to the greatest degree possible, are the guiding principles of local living economies. Each community has the opportunity to build networks of innovative and independent businesses that are committed to the health and wealth of their particular place. These networks are also connected to like-minded groups regionally, nationally and globally to engage in fair trade and spread best practices. Ultimately, local living economies allow cities and towns of every size and political stripe to share their success in growing community assets.”

The statement seems to echo the principles of agricultural cooperatives of times past and present. Farmer cooperation in growing community assets can take many forms, and these cooperative institutions can be linked both horizontally (to other farmers) and vertically (to research, consumers, marketing and finance).

The Hudson Valley effort will try to integrate several initiatives at the same time. The farm hub at Gill Farm will be the central locus for access to training, land, capital and markets. Relying in part on the increasing diversity of Hudson Valley agriculture, a related existing food hub will accelerate planning and investment infrastructure. Finally, an education effort will provide connections, community outreach and agricultural curriculum development.

An Ulster County without agriculture would not be Ulster County at all. A viable agricultural industry fits hand in glove with the county’s tourism development, natural resource planning and land-use priorities.

The farm fields of the lower Esopus Creek in Saugerties, Ulster, Kingston, Hurley and Marbletown and those of the Wallkill River in New Paltz have provided a significant opportunity for farmers since the 1650s. The grain and vegetables in these fertile fields were a major export of the region for centuries. In the nineteenth century the railroads supplemented the Hudson River steamboats in providing the means to carry local produce to urban and national markets. In the twentieth century economic specialization made the growing of sweet corn in the richest of these fields dominant.

The pendulum is swinging yet again.

This weekly column reports on economic trends in the mid-Hudson region. To read past columns go to Ulster Publishing’s hudsonvalleybusinessreview.com.