What's organic farmland worth? Or is it a pearl without price?
A cash grain farm in the cornbelt sold recently for an eyebrow-raising price just shy of $9000 an acre. It sold for farmland, not industrial development. I suppose that shouldn’t be surprising when USA Today reports that yachts over 80 feet long are still selling at all time high levels despite these disastrous financial times. But I can’t see how corn and soybeans will pay for such high-priced land. The grain markets are way down from summer. Demand for grain from developing countries is down. At least five ethanol plants that were supposed to turn corn into fuel have declared bankruptcy. Fertilizer, seed, and fuel costs are still historically high— fertilizer is selling for as much as a thousand dollars a ton. Some farmers have already bought their seed and fertilizer supplies for next year, thinking that these costs would continue to rise along with grain prices. What if grain prices stay down? We could be looking at a possibility of what one farmer I talk to a lot calls “instant bankruptcy.”
One thing is for sure: it is a very good time to be an organic farmer.
If you can borrow money at 7%, the cost for owning $9000 per acre land is $630 per acre by the way I do accounting. Overhead costs for growing a commercial corn crop right now are around $300 an acre or a total of over $900 an acre. Obviously, farmers who pay that kind of money for land are betting on five or six dollar corn or more. (The price as I write is $3.75.) They are speculating on future expectations, the same way the paper money market has been doing.
It is a puzzle to me that in assessing the market value of farmland, seldom is attention paid to whether the soil is organically-managed or not. Surely with its built-in, low-cost methods for avoiding soil compaction and erosion, and its ability to increase organic matter content in the soil, a long term organic farm ought to command a higher price than conventionally farmed corn land. But I bet a hilly organic dairy farm, using manure and legume rotations for fertility, would not bring as much per acre as a level mono-cropped grain farm that has been beat half to death with huge machinery and toxic chemicals. The fields of the dairy farm would hardly be big enough for a huge harvester to turn around in and therefore not desirable. Why so few mentions of this topic, especially now when inputs for chemical farming are so high?
I don’t know what is going to happen with land prices (I think they are going to tank) and bring up this question mainly to show that large scale, agribusiness farming is a risky undertaking and getting riskier. We have accepted the notion that land is a commodity to be bought and sold like paper on the stock exchange. This has led to at least two bad results in addition to high risk speculation with something more precious than paper— our food supplies: 1): Poorer people can’t afford to buy farmland so farms slowly become the property of an oligarchy of the rich; 2): To make a “profit” even rich people must farm for quantity not quality and then the land deteriorates.
More than a few economists have tried to point this out, especially in the economic literature of the Great Depression. (Look To The Land by Lord Northbourne, published in 1940, reads as if it were written today.) But no one has been able to come up with a workable plan to remove farm land from the commodity market. Money always seems to rule. If you give human beings the choice of taking $9000 an acre for farmland or $8000, they will, of course, take the former.
But not always. I once asked a contrary farmer why he didn’t sell out and live at ease for the rest of his life, which he could have done especially since he was happy to live modestly. He paused a little and then answered. “My farm is not for sale at any price. It is my life. And what would I do with all that money, stick it in my ear?
There’s an old joke that is appropriate here. In a certain village lived a man who was thought to be mentally-challenged or in plainer language, he was an example of classic literature’s “village idiot.” He was made the butt of a cruel joke. Village wiseacres loved to offer him the choice between a nickel and a dime. He always took the nickel because it was bigger, he explained. The jokesters of course got a big laugh out of that. One observer pulled the village idiot aside one day and asked him why he kept on taking the nickel. “Surely by now you know that the dime is worth more.” The village idiot smiled. “Oh I know that, but if I choose the dime, those morons will stop giving me nickels.”
I and many thousands of small farmers are the village idiots of agriculture. We farm because we like to make little paradises out of our land while growing good food on it. What we make as a return on investment in money doesn’t matter as crucially as it does for the dime-takers. We often choose the nickel because we have learned that taking the dime means servitude to commodity markets and agribusiness giants over which we have no control.
Society comforts itself during financial bad times by looking forward to recovery which has always come. But will recovery this time mean a return to the present “sanity” of always taking the dime? Irresponsible and uncontrolled credit is blamed for the current dilemma. What if that is an effect of the dilemma, not the cause? Dare we contemplate the notion that some economists are suggesting, that natural resources can no longer keep up with exponential money growth, that the kind of money-lending we have been doing only works when it is tied to the realization that resources like oil and farmland are limited? When real resources and therefore real money (organic money) start running out, will we need a new kind of financial system that finds other ways to keep the economy going than piling fake money on top of fake money until the whole house of credit cards collapses?
If a new day comes, a farm will be priced by how much health and happiness it produces.
See also Gene’s Wood Is More Precious Than Gold
Gene and Carol Logsdon have a small-scale experimental farm in Wyandot County, Ohio.
Gene is author ofThe Mother of All Arts: Agrarianism and the Creative Impulse (Culture of the Land),
The Last of the Husbandmen: A Novel of Farming Life, and All Flesh Is Grass: Pleasures & Promises Of Pasture Farming
Image Credit: Dave Smith, Village Acres Organic Farm, Mifflintown, Pennsylvania
OrganicToBe.org | OrganicToGo.com
What do you think? Leave a comment below.
Sign up for regular Resilience bulletins direct to your email.
This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.