Farming in the Shadow of the City

What happens to traditional agriculture when the city's shadow creeps ever nearer to the farm? The increasing proximity of urban sprawl to agricultural activities is causing wrenching changes in the farming community. Wherever the shadow of the city is evident, the "green industry" (landscaping) is usually the fastest growing, most profitable component of agriculture. There is a similar increased demand for specialty produce, including organic fruits and vegetables, and for decorative items such as gourds and Indian corn.

In New England, an area ideally suited to dairy fanning and apple production, some farmers are descendants of 11 generations of people who worked the same land. Though many of these farms have been incrementally improved over the years, they have been operated in fundamentally the same way for two centuries. Yet during that time, the economy of the region changed dramatically from subsistence cultivation to commercial production. Recently, the urban culture has begun to dominate the rural scene. The main role of farm management has become one of developing and implementing the necessary strategies to make agricultural operations more compatible with the changing environment.

Fragility and Hostility

Most commercial farms in America today are technologically complex, capital-intensive businesses that require a substantial input of committed, often skilled, labor. They operate on small profit margins; consequently, they are extremely sensitive to changes in the economic, social, and physical environment. This vulnerability accounts for the high risk associated with farming. Successful farming depends directly on exceptional management expertise, the ability to grab the few exploitable opportunities that come along, and most importantly, on the ability to develop a sensible strategy.

This fragility has been exacerbated by the relative hostility of the national agricultural environment of the 1980's,which threatens farm viability and performance. Profit, whether expressed as returns to management and labor or as returns to equity capital, has plunged to the lowest level in half a century. After a few decades of stability and growth, American agriculture in the 1980's finds itself trying to function in a more hostile, unstable environment.

Production overcapacity coupled with flat demand is fast turning American agriculture into a "stalemate" industry. Traditional agriculture has generally been considered to be a "mature," but stable, industry; in some areas farming is now starting to show some of the disturbing signs of decline. Survival could well depend on farm managers adopting strategies which managers in other mature industries have used to de-mature their firms and put them on more solid footing.

Crowding the Country

The destabilizing force of fast-paced development can only intensify the hostile climate for agriculture that farmers have battled throughout the past decade. The encroaching city creates complicated management problems that add to the pervasive agricultural problems that underlie farming even under favorable circumstances.

The influence of the city, for example, raises the opportunity cost of farming. When land values increase from $1,500 an acre to 20 times that figure in 5 years, it is impossible for farms to expand. In light of the high opportunity cost, some farmers wonder how much longer they can afford to use their land for agriculture.

In New England skyrocketing land prices, along with the Federal Government's Dairy Termination Program, have devastated the region's dairy industry. Massachusetts has lost one-third of its dairy farms over the past 3 years. Some speculate that the current decline will culminate in the extinction of the State's dairy industry. Federal policy has been somewhat tempered by local and State policy, especially regarding property taxation (reduced or zero property tax on land used for agriculture) and the purchase of development rights (for example the $60 million Massachusetts' Agricultural Preservation Restriction Program).

Hundreds of land trusts are working to reduce the opportunity costs of farming in areas where the city has encroached. State and local governments have devised complex, multimillion dollar efforts that have made a significant impact. Even with these programs in place, the problem is proving to be overwhelming.

Many people move from the city to commuting-distance rural areas for the ambiance of rural living. Soon after these people arrive in the country, they often object to odors and noise from normal farming activities, as well as to the use of sprays of any kind. In 1988, Massachusetts residents had to vote in a referendum on whether to prohibit the confinement of farm animals. When surveyed recently about the problems they face today, farmers reported that their single greatest concern is the harassment they perceive from the surrounding community a concern even greater than high interest rates, low crop prices, and government policy and regulation.

Land-grant university research and Extension programs have attempted to respond to these social pressures on farmers, and have devised some creative ideas. For example, new disease-resistant apple varieties and efficient pest-management strategies have reduced the amount of pesticide spraying. These activities have lessened the impact of farming on the environment, and have often led to lower costs and increased profitability. (See Part V, Chapter 5 on integrated pest management.)

While New England farmers work in the backyard of an increasingly prosperous urban economy, most of them especially those producing traditional commodities such as apples and dairy products have found it difficult to tap the local market and must instead face extremely tough out-of-state competition.

Many State Departments of Agriculture are helping to promote and market selected local products. But there has been limited success in keeping the farmer's price for certain crops on a par with the rest of the economy, and in helping the farmer capture a greater share of the consumer dollar. With a 2-percent unemployment rate, fast-food chains must offer unskilled workers wages of more than $6 an hour. Consequently, apple farmers must import their harvest labor from places such as Jamaica and pay them $8 an hour. And not every farmer is lucky enough to find and keep labor at that price.

Ultimately, profitable farming in the city's shadow requires more than incrementally improving markets or farming practices. The top priority for farm management in this more hostile, less stable environment is the search for better, more effective strategies. Some farm managers have developed workable strategies, and they are surviving, even thriving. Others in similar situations are having trouble.

Four Strategies

Farm managers who face hard times due to encroaching urbanization can choose from four basic strategies to ward off economic disaster: divestment, harvest, niche, and cost leadership. Most managers of declining farms focus on the former two, but creative farmers give more serious attention to the latter two. The reasons are simple: divestment and harvest strategies deplete the farmer's resources; but finding a niche in the market and applying cost leadership offer new opportunities for growth.

Divestment. Quick divestment consists of selling off the farm's assets. Farmers in urbanizing areas usually sell their land to nonagricultural buyers who, in turn, develop it for nonagricultural purposes. Few New England farms on the real estate market, for example, are actually sold to other farmers. Fortunately, land trusts and other programs in the region are providing farmers with incentives that create an alternative to merely selling out to the highest bidder.

Social and economic changes are occurring so rapidly in some rural areas, however, that stabilizing the land-use crisis has thus far proven impossible. This situation contrasts sharply with more rural areas of the country. In these rural areas, where the market value of agricultural assets has decreased, existing farmers who must divest typically sell out to other farmers at prices that do not make farming prohibitive. In this way, the buyer becomes a low-cost producer relative to existing farmers, and becomes more competitive.