Tuesday, October 23, 2012

Farmland Fragmentation and Local Food

In my ongoing effort to make sense of the challenges we've faced in building our small commercial sheep ranch, I keep running up against the question of scale.  Starting small makes sense (small mistakes are less costly, for one thing), but at some point an enterprise must achieve a certain scale to be economically sustainable.  For a vegetable farm, this may be 10-20 acres.  For a pasture-based livestock operation, this may be 500-1000 acres.  Fragmentation - through development, inheritance and other factors - runs counter to this need for achieving scale.  Land prices and land tenure also present challenges.  Perhaps we need a combination of fresh thinking and old approaches to effectively address this issue.  Ultimately, a successful local food system will require enough contiguous farmland for farming (and ranching) to produce food in quantity and at a price that the community can afford.

Some context might be helpful here. We currently manage about 200 ewes and another 40 ewe lambs - not enough for a full-time income, but enough to supplement the income from my imminent part-time job.  As we reorganize our operation, we'll manage these sheep (and their annual "crop" of lambs) on 400 acres (most of it contiguous) about 3 miles from our home.  If all goes as planned, we'll irrigate about 25 acres out of this total.  The land we graze is owned by more than 15 different families - the largest parcel is 100 acres; the smallest is about 3 acres.  Some of it we lease; most of it we graze through a cooperative arrangement with the owners.  We manage their vegetation in exchange for free grazing.

Real estate values, even in the current economic downturn, are far greater than the value supported by agricultural production.  For example, one of the properties we currently graze is on the market for $1.4 million.  Based on it's agricultural production, it's probably worth about $500,000.  Because of this differential, we've built our business on leased rather than owned land - we simply can't afford to buy land with the income generated by sheep production.

Despite its economic advantages, leasing land presents a number of challenges.  For example, one of our landlords decided to mow the irrigated pasture we were depending on for finishing our grass-fed lambs this year.  Other landlords have decided that they can receive greater income from other uses of their properties (from boarding horses in one case).  Even with written lease agreements, priorities change and our long-term access to land is tenuous at best.

Our experience in finding land is not unique.  Other farmers face similar challenges.  Vegetable and fruit production rarely generate enough income to justify purchasing the 10-40 acres necessary for establishing an economically viable farm.  Even long term leases don't provide the same stability and predictability of ownership.

If we look back in our national history, the Homestead Act may offer a framework for re-establishing a local food production system.  At the risk of grossly oversimplifying the Homestead Act (and acknowledging the displacement of Native Americans that the Homestead Act facilitated), this program encouraged the establishment of farms by rewarding the agricultural improvement of vast tracts of land.  Families who invested 10 years of sweat equity were rewarded by receiving title to the land they were working.

What would a modern Homestead Act look like?  I'm not the first person to suggest this idea - others may have different ideas.  From my perspective, a private Homestead Act, administered by local governments and nonprofits, could encourage the establishment of medium-sized commercial farms that market their products locally.  My concept is admittedly vague at this point, but here's the basic approach:

Local communities could identify key farm and ranch properties with willing sellers - farm and ranch land that should remain in agriculture because of it's soil properties, productivity and history.  While conservation easements have traditionally been the method of choice for keeping land in agriculture, a local "Homestead Act" would require nonprofits and local governments to acquire these lands in fee title.  Upon acquisition, the new owner would identify a qualified farmer who would take over the day-to-day management of the property, initially subject to a long-term lease (5-10 years).  In exchange for paying rent, the tenant would be responsible for all property expenses (property taxes, water, infrastructure development and maintenance, etc.).  If both parties were satisfied with the relationship after the term of the lease expired, the farmer would be offered a life-estate on the property - that is, he or she could farm the property for the rest of their lives.  Upon the retirement of the farmer, the property would be made available to a new grower under similar terms.

Obviously, there are many logistical questions to such an arrangement.  Property taxes would have to be assessed on the land's agricultural value (rather than on its development value).  Some mechanism for securing capital for infrastructure investment would need to be developed.  An objective evaluation of the performance of both parties to the initial lease would need to be developed.  Regardless of these obstacles, I believe that such a program would help solve several critical issues relative to agricultural land conservation:

  1. Land trusts and government agencies typically don't make good farmers - they are effective at protecting land from fragmentation but are not good day-to-day managers.  Farming, if done well, requires that somebody - the farmer! - have intimate knowledge of a piece of land in all its seasons. Land trust and agency staff, who are usually responsible for multiple parcels, generally don't have this intimate relationship with a specific piece of land.
  2. Our current method for valuing conservation easements rarely diminishes the underlying value of a piece of land to the point where a new farmer can afford to buy it.  Currently, conservation easements are appraised based on the diminishment in value caused by the restrictions placed on the use of the land.  For the land to be affordable from a farming perspective, the underlying value should be based on the land's agricultural productivity.
  3. Such a program would provide successful small-scale farmers with an economical, long-term option for scaling up.
As our region looks at options for increasing local food production and sustaining the economic viability of local farming and ranching, we need to address the issue of land tenure and affordability.  A new "Homestead Act" might represent one such opportunity.

No comments:

Post a Comment