Firing The Landlord


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From GENE LOGSDON

That’s the term farm economists are using to describe the situation we are in right now when farm prices don’t justify the rental fees farmers are paying for corn and soybean land. The renting farmer says he can’t pay and if the landowner won’t agree to a lower fee, the farmer breaks the lease. He “fires the landlord.” What a joke. It’s always the renter who gets fired in the long run. Threatening to fire the landlord may bluff him or her into negotiating a lower fee, but landowners are paying more taxes on their land now and can usually find a less cash-strapped renter to agree to the higher rates. Sad to say but once again in this latest round of “market adjustment” the less endowed farmers who rent most of the land they farm are once again going to take a beating while the deeper pockets survive.

Crop and land prices do fluctuate over time, and so far have always gone up again. But if you get caught in the downdraft between the surges with too much borrowed money or, in this case, too much borrowed land, it’s bankruptcy all over again. It is such an old story and although we old dogs try to preach caution, our words go in one bank account and out another. Money may not be the root of all evil, but borrowed money is. Renting often seems safer because you can walk away from it easier than you can walk away from borrowed money, but nevertheless renting is a form of borrowing. And so often the renting farmer also has to borrow big for big machinery to farm his bigger acreage.

It is most interesting to watch who wins over the years with this kind of up and down farming. I like to study the old plat maps of my county. Remarkably, the big farms that survive today are owned by someone or some group connected by blood or marriage to the families who acquired it in the earliest days, often by government grant. These landowners rarely have to pay interest on borrowed money to keep on expanding, but use their profits to expand. Farmers who borrow their way into business have to use their profits to make interest payments. A few of them make it. Over the years, most do not. My father, borrowing his way along, often complained when I was growing up that he farmed just as well as farmers in the black but “the 6% profit a farm generally makes I pay right out in interest.” I saw it happen time after time. The guy farming on borrowed money sooner or later sold out to his neighbor farming exactly the same way but on inherited land.

This is the story of every farm recession since Columbus sailed the ocean blue, whether we are talking about the years when a big farm was 200 acres or today when a big farm is 20,000 acres. The farmers in the black from the beginning, who expand conservatively, using savings and only a little borrowed money if any, may not make the bigger bubble money during “good” times, but do just fine because they are not paying out interest and then can grow bigger using savings when land prices are lower in bad times. A successful large acreage farmer I know realized that he could make almost as much money renting his land out at the ridiculously high going rates as if farming it himself and that’s what he did with some of his land. Farmers, usually younger ones, are willing to gamble and pay high rent because that is the only way they can, hopefully, generate enough equity to buy land themselves.

I saw some statistics recently that startled me. In Pennsylvania, some 85% of the farmland is owned by non-farmers and that number is increasing. A little over half the landlords never ever farmed. I presume this is generally true of many other states but haven’t had time to check it out (National Agricultural Statistics Service). The non-farming landlords I know aren’t about to sell either. They know farmland is a very good investment for them. As more and more big corporations get into farming for the same reason, it means in my opinion that oligarchy is on the rise and democracy is waning.

Maybe the socialists are right. Land is a national treasure, not a commodity. But I can’t figure out a way to keep it from being a commodity. Can you?
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21 Comments

Gene, dont forget the small farmers that you’ve wrote about that followed that philosophy with small tractor farms too! Your cousin Dave Haferd ,Bob Frey plus the Amish farmer who only farmed 26 acres with horses.The ideas of lots of these small farmers were great lessons in economics and philosophies. So many of the small farmers you wrote about in the past had ideas or philosophies that went against the grain of get big or get out but now make more sense than ever. I had a neighbor who back in the day when he raised hogs ,raised them to about 400#s. Now a lot that do farm to consumer marketing are raising them to the same size.I believe that idea there is to allow the meat and fat to gather more flavor before the animal gets butchered .I believe the suburbanite with the acre or two will be the ones to feed the world in the future because all of the land will be in houses,warehouses,schools,roads soccer fields and nature preserves.

Gene, you have mentioned the Amishes on many of your past blogs. Can you share with us your thoughts connecting their business wisdom with this business mess?

    Celio: Oh yes, I have done that often, best summarized in Chapters 9 “Amish Economics” and Chapter 10 “A Horse Drawn Economy” in my book, Living At Nature’s Pace. Basically, what the Amish do is maintain input costs at the lower expenses of yesterday’s farming methods and selling their production at today’s high prices. Gene Logsdon

Stopping the subsidation of commodity ag would be a start. Other than that and continuing in the broadest of strokes – aiming all our might toward perrinial agriculture, like you used to say “a grove of trees to live in” and I like their 50 year farm bill idea and more animals on dirt… it’s not like the right ideas aren’t out there… but before i rage against the machine there’s a watermellon on the porch that needs eating😉

I do feel this is a vexing problem, especially in our society where virtually everything has been reduced to a commodity. I have no doubt the readers of this blog (as well as Gene himself) are part of a minority out to change that.

The fact is, I doubt the solution can be achieved in any of our lifetimes, but we can start the work and many have. By growing your own food, living on a farm instead of a condominium, by practicing good husbandry of whatever little slice of land you can afford, these are all the hopeful first steps on a long road. No matter if you have a day job or some other off farm income to support the endeavor. You have, both literally and figuratively, planted the first seed that’s the best chance of returning things to a sane and sensible use of land.

Perhaps the ultimate act of rebellion in the face of a corporate takeover of our nation’s farming legacy is to purchase a small farm from a retiring farmer smack dab in the middle of the endless fields of Big Ag and say, “this is my home, this is my land, and I’m not moving.” We may not see the results of the revolution we’ve started but rest assured, you were there when the first shot was fired.

    Brian, this is exactly what I have done! The bees may not survive here on Persimmon Ridge because they do not know how to stay home! Flit off 2 to 5 miles and get themselves into all kinds of conventional farming misbehavior! But the goats, chickens, and garden hang tight and feed me well. I recently visited my adult children who live in Ft Collins, where I raised them, and which has about one restaurant per person it seems–lots of supposedly good food and foodies. I was SO anxious to get home to my own absolutely world-class food that I raise myself and that the many restaurants couldn’t touch! I am spoiled rotten!

      Betty and Brian L and all, yes, yes, Betty, that is exactly what we did too. Our little farm home is an island in the midst of thousands of acres of corn and soybeans. Chris, I have shared your thoughts about a new landed aristocracy many times. Jan Steinman, the idea of commons is most appealing. However I can’t help but think of nasty people I know who would get in there and cause all kinds of problems. Thanks to all of you for so many interesting thoughts to reflect on. Gene Logsdon

We may eventually see a sort of landed-aristocracy of the old, long term families, much like England and the Continent had until they taxed them out of existence. The rise of such a class is not entirely bad, because they will tend to take care of the source of their wealth, unlike a renter who wants to mine the land for as much profit as he can. Absentee landowners can still direct the renter to maintain wildlife areas, and practice good husbandry as long as they keep in mind the long term health of the land. We see some of that sort of ethic growing in the Northern Great Plains with restrictions on draining wetlands. Frankly, the grandchildren living in the city are probably more likely to demand good stewardship of the renter than the fenceline to fenceline Big Farmer .

It’s so hard to get people to act in the interest of the group instead of their own self-interest (which is probably because down through the ages, acting on self-interest was how the individual survived), or to take the long view, and to do both consistently over many years. That’s why it’s called the tragedy of the commons. I don’t have the answer but I suspect it lies in the young and how we teach them about the value (and I don’t mean the monetary value) of the land and all living things. Another thought-provoking post, Gene.

“Maybe the socialists are right. Land is a national treasure, not a commodity. But I can’t figure out a way to keep it from being a commodity. Can you?”

There’s a private organization in France called “Terre de Liens” (Land of Links, the link between farmer and land). They buy land for your installation project via crowd funding, and rent it to you, until retirement or when you want out. There are usually dozens, sometimes hundreds, of investors, each investing a small amount of money. Their investment is not paying back much, the objective is not to make a profit, but to install new farmers. The farmer does not have to deal with the investors, just with the organization, although in many cases, investors become CSA customers. The organization also pays for the maintenance and the development of the buildings and the land, that cost is included in the rent upfront, to make sure of the viability of the project. They don’t have many farms yet, about 120 since the organization started, when we’re losing about 200 farms every week. The call to public subscriptions is quite popular though, with many investors becoming CSA customers afterward. The organization also adds an environmental clause in the rent contract, so almost all farms funded are organic.

I agree with Jan Steinman. Returning to a function of commons is a very different way of looking at the land than is common at present, and could be much more functional. When the community holds the land and farmers share implements there are any number of savings and efficiencies to be realized. Usufruct land rights were the standard all across the south as the frontier opened to the west (in much the same fashion as the Indians had used the land before them) and it was only the arrival of fenced land agriculture in Texas that changed that paradigm in the early 20th century, and stopped the continued extension of that approach at the east Texas/Louisiana border. The piney woods of east Texas were the last stronghold of the old bottom land farmer/woodsman/cattleman into the mid-1900s but died out with the institutionalization of the deeded property approach coming in from the north and mid-west.

I am a small farmer with what I consider a lot of land: 153 acres. We live in central British Columbia. About 60 acres is in hay. I use about five acres for my six Dexter cows. We have always thought of land as a trust (from God). So we won’t allow any more clearing of potentially good low, wet land. We rent the hayfields for a very cheap price to a neighbor who also swaps some work with us. I think that landlords need to think about things in stewardly terms. This may mean putting conditions on how the land is used (like Prince Charles does in Cornwall) but also realize that many farmers need a break from a profit-motive sort of mindset.

Corporatists have destroyed nearly every other facet of the American middle class, the latest victim being our university system. It should be no surprise that corporate business plans would target large scale ownership of our nation’s farmland. Gene is right about oligarchy replacing our democracy.

Maybe the socialists are right. Land is a national treasure, not a commodity. But I can’t figure out a way to keep it from being a commodity. Can you?

I think small commons is the answer. A small group of people pool their resources and buy land together, managing it in common.

But they’d better do it with cash. We’re having a tough time trying to do that with a mortgage.

What is the reason/reasons behind the 85% lease number?
Farmers not able to afford the land or not willing to gamble the purchase? That is a shocking number to me. Coming from the old country, where land was usually worked by the owner and owner’s family, unless there was a barter between neighbors: you can hay my field, and I will borrow your horse when I need it on occasion.
I work at a CSA where two young folks lease the land plot (a third one in 5 years! – so they need to move their farm every so often) because they 1. cannot afford to purchase yet and 2. just learning about the soil properties and location. Having the land farmed allows the landowner to dramatically reduce the taxes in highly taxed suburban area, which in turn provides the young farmers an affordable lease. But. . . little incentive to establish orchards or improve soil quality.

There once was a wildly popular economist named Henry George who proposed a simple solution – the land value tax or single tax. This tax on the unimproved value of land would restrain absentee ownership and land speculation as well as incentivize the government to push land into private ownership. Improvements to the land such as buildings, barns or factories would not be taxed. The productive smallholder had the most to gain in this scheme. It has attracted an odd assortment of advocates, from arch-conservative Bill Buckley, to the agrarian Ralph Bordosi.
In theory land is owned in common, but because common management is always ineffective land should be held as taxed private property very similar to how distributists would like to see it.

I completely agree with the sentiment here, but for the life of me I can’t think of any way for us to look at land than we already do. Our society couldn’t handle holding land in common. My opinion is just that farmers need to diversify away from corn and soybeans for export, focus more on locally usable feedstuffs, and stop relying on the large equipment that requires monthly payments.

Speaking to larger economic problems, if we mandated that tractors were illegal, everyone would have a job TODAY and our epic soil degradation would slow to a crawl. It would probably also force beginning farmers to start slow and realize that they can get by on a small profit until they can afford to buy more land with cash in hand.

    Make tractors illegal? I hope you grow your own food (with hand tools, or maybe horses); that’d be about the only way you would be able to afford to eat. Every decision has trickledown effects.

      I do grow my own food, with hand tools. Food is cheap in this country due to many factors. When our country was founded and was growing into what it is today, almost everyone did grow their own food. Now we don’t have the homestead act allowing us to just squat to own our land, which in my opinion makes it even more important that people should be growing their own food by hand. What better use of time is there?

      If NO ONE was allowed to use tractors, it would be a level playing field, and at least those growing food could afford to eat.

      Nine out of every ten calories we eat come from petroleum, which is in permanent, irrevocable decline. All sorts of people — city, rural, rich, poor — are about to get more intimate with their source of food.

Henry George had a pretty good idea, but not enough people agreed.

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