Why Family Farms Keep Growing

Published online: Jul 21, 2016 Zach Kyle
Viewed 2566 time(s)

Western Idaho farmer Richard Durrant regrets not making two business decisions in the 1980s that would have paid handsomely. First, he wishes he had started buying his father’s share of Big D Ranch, the 1,500-acre family farm on 10 Mile Road between Meridian and Kuna. Second, Durrant wishes he had snapped up neighboring farmland for $3,000 an acre. It now commands more than $10,000 an acre.

Buying land would have stretched him financially in the ‘80s, Durrant says. But considering the record-high sales and profits reported by Idaho farms in recent years—and how the largest farms have operated more efficiently—a land bank would have proven a wise investment.

“We should have been procuring back then,” he says. “But I didn’t know ag was going to take off like it has in the last few years.”

Plenty of Idaho growers share Durrant’s sentiment. Family operations working several hundred acres contend with rising costs, especially for equipment, without the cash flow to buy land that would produce enough crops to justify the investment, says John Thompson, spokesman for the Idaho Farm Bureau Federation.

Many small farmers have sold or leased their acreage to farmers looking to expand, Thompson says. From 1982 to 2007, midpoint acreage of Idaho farms rose more than 100 percent, according to the USDA. By 2012, 13 percent of Idaho farms accounted for 93 percent of farm sales.

Idaho is still home to plenty of small farms, says Garth Taylor, agriculture economist at the University of Idaho. They just aren’t contributing much to the ag machine that increased sales from less than $4 billion in the early 2000s to a record $8.7 billion in 2014.

“The mom-and-pop stuff worked then,” Taylor says. “It’s not what’s working now.”

Agriculture in Idaho and the rest of the nation would be sunk by falling prices across most crop types if not for consolidation, Taylor says.

Efficiency Gains

Idaho potato prices, adjusted for inflation, have fallen 30 percent since 1980, according to the University of Idaho. Potato acreage in the state fell 1 percent. Idaho potato growers have survived because their yield increased 44 percent, thanks largely to farms and farm equipment getting bigger and better.

The same is true in dairy, Idaho’s largest ag sector. Operators today bring in 38 percent less than in 1980, adjusted for inflation, according to the university. Idaho’s dairy herd grew by 124 percent, but the real gains were made in milking technology and animal nutrition and hormone regimens. The average Idaho dairy cow produces 58 percent more milk today than in 1980.

Farm consolidation has pushed commodity sales up and consumer prices down, Taylor says.

 

Big Equipment

Big D Ranch is one of the larger operations near Boise and Meridian, though southern Idaho has farms in the range of 10,000 acres, and some farm owners in the Midwest control hundreds of thousands of acres.

Durrant, who grows sugarbeets, corn, wheat, barley, hay, beans and peppermint, says farmers need to work more than 400 acres to justify investing in today’s big, fast, expensive equipment, such as the $120,000 swather he bought last year that cuts hay four times faster than his old machine did.

“You might as well go from a 10-foot-wide piece of equipment to 20 and get twice as much work done,” Durrant says. “It’s all about productivity.”

Wolfe Bros. partners Billy and Jim Wolfe operate nearly 6,000 acres at several sites across southern Idaho, including near their farm headquarters in Grand View. The Wolfes have invested more than $10 million in top-of-the-line Massey tractors, swathers and bailers. They recover the investment by operating faster and paying for fewer employee hours.

Billy Wolfe says a young farmer trying to buy into hay farming would have to pay $1.5 million for inputs, including machinery.

“You need at least 750 acres in order to put bread on the table and replace the iron when it wears out,” Wolfe says. “Then it’s about speed and how efficient you can get.”

 

Next Generation

The Idaho Farm Bureau says it has 14,000 member families making a primary living through agriculture. Many are aging farmers looking to ride out the rest of their careers. But farmers needing long-term livelihoods are buying or leasing large tracts and looking to technology to streamline operations, says Thompson, the Farm Bureau spokesman.

“These are big-time agribusinessmen,” Thompson says. “They have a computer in their pickup. They aren’t just harvesting grain and selling it. They are trading futures. They have consultants helping them make those decisions.”

Idaho farmers are using technology to collect and analyze data, to identify problems before crops suffer damage, and to tailor water and crop application schedules to give the plants what they need.

Wolfe keeps an iPad in his truck and checks four or five apps just to track the weather. Durrant uses his smartphone to check the watering schedule of his 11 pivots. Instead of driving his acreage each day, he now responds when a ping on his phone indicates there’s a problem.

“Even the guys who were skeptical are now experimenting with drones and all kinds of stuff,” Thompson says.

 

Land as a 401(k)

Some of Durrant’s neighbors have sold. “You are looking at a retirement, and that’s probably your only option,” he says.

It’s not little guys being forced out, Taylor says: “Give me a great retirement. Let me retire wealthy. Force me out all you want.”

Most Idaho farmland transactions pass acreage from one farmer to another, Taylor says. However, several large tracts of land in the Magic Valley were recently purchased by investment groups planning to lease them to growers. That offers safer returns than other investments, Taylor says.

Developers have altered the farming landscape near urban areas. Durrant says he receives several calls a week from developers wanting to build houses—what some call the final crop.

Durrant says they offer more than $20,000 per acre, giving farmers a chance to retire wealthy. Durrant says he is not interested.

“They call and say they can make a great offer,” he says. “But this is a family farm. I’ve got kids and grandkids, and this keeps us all out of trouble.”

 

Source: Idaho Statesman