Farming in the Shadow of Suburbia

Regional ReviewSpring 1997
by Jane Katz

Agriculture in New England has been closely intertwined with urban development. In the early nineteenth century, small family-owned farms spread throughout the region's river valleys following the establishment of industrial mills and towns. They provided food, wool, and leather for the neighbors and also etched themselves deeply into our regional character, along with white-steepled churches and town meetings. The rural landscape, with its patchwork of neat farmhouses, stone walls, and hills dotted with cows, became ingrained in our local identity and imagination.

As the pace of industrial and urban development quickened, especially after World War II, the relationship between farm and town became more complex. Cities that earlier had provided the impetus for agricultural expansion began to encroach on rural areas, raising property values and diverting labor to higher-paying jobs in town. Competition from imports, both domestic and from around the world, intensified the pressures. Farms and acreage devoted to farming declined sharply, with only the most fertile -- or best located -- areas persisting in agricultural use. Today almost half of the remaining New England farms and more than one-third of farm acreage are located within a stone's throw of significant population centers. As a Lincoln Land Institute study observed, much of the region's surviving farmland now lies in "the shadow of suburbia."

New England farmers take advantage of their proximity to urban markets, offering perishable and high-value products that maximize the return on the land. But the pressures of high land prices and the lure of city wages remain. And as the number of farms declines, crucial suppliers of seed and equipment may leave for less congested locations.

Many of the region's residents hope that farming will not be pushed out altogether, but will be able to coexist with surrounding metropolitan communities. Environmentalists have surfaced as farmers' sometimes allies, along with others who care about the preservation of open space. Farms create the rural vistas and variety in the landscape that bring visitors to the region. They also give New Englanders a strong sense of place, notes Holly Dominie, a landscape architect from Readfield, Maine, one that is rich in meaning, conjuring up a safe and readily understood world, with distinct boundaries, centered on family and community values.

THE PRICE OF FARMLAND

Agriculture was a growth industry in New England throughout the middle of the nineteenth century. Between 1850 and 1880, the number of farms rose by more than 20 percent and agriculture occupied more than half the region's land area. The landscape was cleared for miles in heavily forested Maine. In New Hampshire, farms expanded into such unlikely locations as partway up Mount Monadnock.

After 1880, the development of the railroads and refrigeration made it cheaper to import food from areas with more hospitable climate and soil. Improved farm machinery and other new techniques created economies to large-scale agricultural production. These circumstances favored the flat topography of the Midwest, whereas New England's smaller holdings, patchwork ownership patterns, and rocky, rolling landscape inhibited consolidation into larger, more productive enterprises. As farmers elsewhere were able to produce ever more, at lower cost, U.S. farm acreage and average farm size grew larger, while the number of farms dropped. In New England, farmers saw a steep drop in both farms and acreage, as their income often did not cover costs. Many farms were simply abandoned as cultivated land and returned to forest.

Since World War II, the price of much of New England's surviving farmland has soared because of its growing value for housing or commercial development. Rising incomes, which led to increased spending on nonfood items as compared to food products, spurred more commercial enterprise and the expansion of suburbia farther into the countryside. Agricultural land, which had already been cleared and graded, grew ripe for development.

Today, New England contains some of the highest-priced agricultural land in the country, reflecting the dense population and the value of land in alternative, nonfarm uses. While the average U.S. farm was valued at $832 per acre (including buildings) in 1995, the average value in New England ranged from $1,245 in Maine to $6,947 in Rhode Island. Rising land values and urban development also tend to drive up property taxes. Even though much agricultural land is taxed at a lower rate than other commercial property, New England farmers paid average property taxes ranging from $11 per acre in Maine to $57 in Rhode Island, far in excess of the U.S. average of $6.

High land prices put intense pressure on the region's farms to generate incomes that are substantial enough to justify keeping the land in agriculture. Some farmers only partially succeed, maintaining their farms as "rural residences," not so much for commercial viability as out of personal commitment and the satisfactions of farm life. About two-thirds of the region's farms, accounting for about 40 percent of agricultural acreage, generate revenues under $25,000 per year.

But many are substantial commercial ventures. These farmers have adapted to their metro-area location by producing for local markets, often specializing in items that are perishable or costly to transport. Thus, almost 30 percent of New England's total agricultural cash receipts comes from milk, with over half that revenue generated in Vermont. Another 20 percent comes from fruits and vegetables, including Maine potatoes and Massachusetts cranberries, which account for one-fifth of the two states' receipts. Christmas trees, greenhouses, and nurseries generate another 20 percent, and almost two-thirds of sales in Rhode Island. In contrast, livestock (including poultry, but not eggs) accounts for less than 8 percent of revenues.

A number of farmers, noting rising urban incomes and growth in gourmet and organic food stores, now produce high-value, niche products. One grower raises shiitake mushrooms in an abandoned textile factory in North Adams, Massachusetts; another farms red deer in Vermont. Aquaculture has boomed, with salmon from Maine and oysters from Connecticut leading the way. Many growers supplement traditional revenues, and boost their return per acre by adding special services and processing. They produce exotic cheese, gourmet potato chips, and fancy maple syrup that generate high prices and high margins. Although statistics are not collected specifically on niche farms, Aubrey Davis of the New England Agricultural Statistics Service believes that their numbers are on the rise.

RISE AND DECLINE
New England Farms
Number of Farms Farm Acreage Farm Acreage Farm Land As Percent
of Total Land
1850 167,700 18,367,000 110 46
1880 207,200 21,484,000 104 53
1940 135,200 13,371,000 99 33
1960 56,900 9,316,000 164 23
1970 28,600 5,600,000 196 14
1990 28,900 4,621,000 160 11
* Total land includes dry land and land temporarily or partially covered by water.
Sources: HISTORICAL STATISTICS OF THE STATES OF THE UNITED STATES, TWO CENTURIES OF THE CENSUS, 1790-1990 and STATE AND METROPOLITAN AREA DATA BOOK 1991, U.S. Bureau of the Census.

FEEDING THE LOCALS

Nothing evokes autumn in New England more than a crisp, tart apple, especially a McIntosh, for which New England has the ideal climate. And the region's high population density makes for a sizable market for local growers. Yet even with these advantages, growing apples in the shadow of suburbia creates special problems.

For starters, high land prices make it difficult for smaller growers to expand when that would be the profitable strategy. Small growers could once make a living selling to mom-and-pop stores and small (two- and three-store) chains, but now most apples are sold through large grocery chains. This puts a premium on farm size, since large chains will buy only from farmers who can deliver several thousand bushels a week. Many chains also want their apples waxed and individually stickered, which requires special equipment that smaller orchards find expensive.

These issues present few problems for large growers like Woodmont Orchards. Woodmont, owned and operated by Bob Lievens, his brother Stephen, and their father, William, was started during the Great Depression by William's dad in Hollis, New Hampshire. Over the years, the family increased its land holdings and added packing facilities as business prospered. Woodmont now consists of three orchards, each about two hundred acres: the original farm in Hollis, an orchard in Londonderry, and another in Lyndeborough. The Lievenses grow mostly Macs, but also Cortland, red and yellow Delicious, and a few other varieties. During peak season, they can pack and ship up to five thousand bushels a week.

But today's high land prices make it expensive and difficult for smaller growers who want to consolidate and increase production. And expansion is next to impossible at any reasonable price once all the nearby land has been developed. For example, the Lievens' Londonderry farm is hemmed in on the north and west by housing subdivisions, on the south by commercial development, and on the east by I-93 and Derry.

So small and middle-sized growers, like Erick and Sue Leadbeater, often struggle to stay in business. The Leadbeaters own and run Gould Hill Orchards, about one hundred acres atop three hills in Contoocook, New Hampshire just outside of Concord, with clear views all the way to Mount Washington. They grow more than eighty varieties, including a "heritage" orchard of antiques and their own Hampshire apple, patented several years ago. Waxing and stickering machines are not profitable at their production volume, so they sell 80 percent of their harvest through a packing house, reducing already thin margins.

Like many smaller growers, the Leadbeaters have been able to stay afloat partly because of urban consumers' growing interest in fresh, high-quality produce. Each year, hundreds of schoolchildren traipse through Gould Hill for an educational tour, a hayride, and a chance to make cider. Nursing homes bring residents to their wheelchair-accessible orchard for pick-your-own. The Concord planetarium recently delivered five hundred sky gazers to their hilltops to view a lunar eclipse. One well-heeled party of ten even arranged for a gourmet dinner, served at sunset under apple blossoms.

Most visitors stop by the farmstand to buy apples and other produce. The store, managed by the Leadbeaters' daughter and her husband (former restaurant owners and chefs for the gourmet dinner), stocks a variety of apple-related products, including pies, cider, jelly, T-shirts with the Gould Hill logo, and even luxurious Persian rugs depicting the indigenous apple orchards of Kazakhstan.

Such efforts to supplement traditional revenue sources have been especially helpful to well-located farmers within reach of a critical mass of tourists. Over the past decade, the average revenue from direct sales has risen almost 20 percent for those New England farms that sell direct. Several states have begun to encourage the links between agriculture and tourism; Massachusetts is compiling a directory for travelers who might want to visit, or stay overnight, on participating working farms. Local communities have set up weekly farmers' markets. One grower near the Lievenses is reducing his apple production to what he can sell direct, and is using the freed-up land to expand into other crops and extend the pick-your-own season. The downside is that now he will be dependent on good weather not just during the growing season, but also during the weekends when the fruit is ready to pick.

Meanwhile, all producers face furious competition from apples grown outside the region, including new and exotic varieties such as Fujis and Galas imported from New Zealand and Australia. Bob Lievens says that the growing availability of all kinds of fruit from the Southern Hemisphere has put a significant crimp in the supermarket shelf space allotted to local apples during the winter. Washington State has also become an apple powerhouse, with centralized packing facilities and corporate orchards as large as one thousand acres. Washington now produces five billion pounds of apples each year, more than half of all apples grown in the United States. There, growers combine forces to promote, market, and fund research; they pay in 25 cents for every 42-pound box of apples sold, giving them enormous marketing clout. Many New England-based grocery chains even run radio spots that feature Washington apples.

NICHE FARMING EXPANDS
Cash receipts, New England
1995 1970
GAINERS (GROWING SHARE) Millions of Dollars Percent of Total Percent of Total
Christmas trees/greenhouse/nursery* 441 21 7
Vegetables other than potatoes 135 6 4
Aquaculture 127 6 1
Cranberries 81 4 1
Other fruits and berries 49 2 1
Hay 35 2 1
Livestock other than cattle, pigs, sheep 31 2 <1
Maple syrup 17 1 <1
LOSERS (DECLINING SHARE)
Milk 601 29 37
Eggs 212 10 16
Potatoes 105 5 10
Tobacco and other crops 95 5 5
Cattle, pigs, sheep 91 4 6
Apples 46 2 3
Poultry 33 2 8
* 1970 does not include Christmas trees.
Source: New England Agricultural Statistics Service and author's calculations from state estimates.

AVAILABILITY OF FARM INPUTS

Farming near an urban population also affects the availability of farm labor and other crucial inputs. City wages tend to be higher than pay in rural areas, even after accounting for education level, finds Stanford economist Edward Lazear. Thus, higher-wage jobs in town tend to lure the young and best-educated workers. For New England apple growers, finding pickers during the harvest season has become increasingly difficult, and many, including the Lievenses, rely on migrant workers from Jamaica brought to the region under a special federal program during the seven-week harvest season.

But some families find that off-farm employment possibilities in town operate to their advantage. Sue Leadbeater, for example, works for a local accountant during income-tax season. And many farm households are sustained by one or more members who have other jobs. In fact, fewer than half of all New England farmers claim farming as their principal occupation. A substantial number depend on off-farm income to survive.

Others worry that high land prices, urban traffic congestion, and a decline in the number of farms will cause specialized suppliers of feed, fertilizers, and seed to leave the area. A reduction in vendors, notes Douglas DiMento of the New England dairy cooperative Agri-Mark, may result in higher prices charged by the few equipment dealers and repair services that remain. The loss of suppliers also fuels uncertainty. And uncertain farmers may hesitate to invest in new structures, better drainage systems, or improved machinery and technology. In this way, farm decline can become a self-fulfilling prophecy.

Still, urban development and high land prices have their benefits. Many, like the Leadbeaters, have weathered a bad year by selling off a small parcel. Others have used the proceeds from a marginal plot to send a child to college or to fund retirement. Some simply hold the land idle in anticipation of conversion to nonfarm use, as the region continues to lose both farms and farm acreage. Bob Lievens says he has seen the shake-out of apple producers at a rate of one or two each year since he began working full-time at Woodmont in 1969. The result, over the past decade, has been a decline of about 25 percent in the region's apple production. Frequently, the decision to stay or sell is made when the owner retires or dies, and sometimes it is dictated by estate taxes. Gould Hill Orchards will almost certainly be taken over by Erick's daughter or grandchildren one day. The future of Woodmont is less certain. Bob and Stephen Lievens each have two children. They hope that at least one of their kids will want to continue in the family tradition.

THE VALUE OF OPEN SPACE

As the city has closed in on rural communities, preserving farmland has taken on new urgency. Rather than see farmers moving out when nonfarmers move in, many hope that agricultural land will be increasingly intermixed with commercial and residential areas.

Given the irreversibility of much urban development, even city dwellers and suburbanites share this sentiment. Some are concerned with protecting environmental resources. Others hope to limit growth and preserve remaining open space. Many consider the cultural heritage of farming and the aesthetics of the New England farm, if not vital to our regional character, at least crucial to the tourist trade.

The gist of these arguments is that agriculture is important to New England beyond its narrow role in providing food and other products. Open space and an attractive countryside are highly valued by nonfarm neighbors -- in fact, these benefits increase as the population around to enjoy them grows. But they will be underprovided in the private market. Once made available for one person, they are available to all, so even those who cherish rural vistas will wait for others to supply them. Farms' valuable environmental resources may also be squandered unless developers and others are required to bear the social cost of using them up. Thus, there is substantial public support for programs that tax farmland at lower rates or pay farmers for their development rights. It is not always clear, however, if this support is for farming or for slowing growth, as some studies suggest that residential development may not bring in tax revenue sufficient to cover the additional public services that are needed as a result.

Yet farmland preservation may not always be the appropriate way to satisfy these varied and worthy claims, for the goals of farmland preservation, preservation of open space, and protecting the environment may not be easily reconciled. Cows dotting the hill may make for bucolic surroundings. But nonfarm neighbors often object to the farmer's penchant for operating noisy machinery early in the morning or to the smells of a nearby herd. The use of pesticides and fertilizers also may create environmental problems, which become more serious as the number of people living nearby, particularly children, increases.

Farmland also may not be the only, or best, way to provide open space. Land appropriate for hiking and nature preserves may be unsuitable for commercial development. Thus we could conceivably acquire land for recreation and open space at a lower cost than by preserving farmland. But in other instances, it is farmland itself that society values. In Maine, for example, farms provide much-needed variety and visual relief to a landscape that would otherwise be almost entirely forest. And in the southern New England states, especially Connecticut, almost all the remaining open land is farmland.

We might also consider whether our aim is to preserve farmland or farming. If we want farmland, "rural residences" may satisfy our need for open space, country vistas, and visual relief. But if our end is preserving farming, as an economic activity and as the site of a long legacy of social and cultural traditions, then only working farms will do.

SMALLER FARMS CHANGE THE LANDSCAPE
Percent, 1992
New England United States
Farms Acres Sales Farms Acres Sales
Rural Residences (Sales of less than $25,000) 67 41 5 63 22 5
Small Commercial (Sales of $25,000-$99,999) 16 17 12 20 24 13
Larger Commercial (Sales of $100,000 and above) 17 42 83 17 54 83

About four thousand larger commercial farms account for most of New England's agricultural sales, but smaller farms make a significant contribution to the rural landscape. In this respect, New England is similar to the national profile, which averages states, such as North Dakota, that have a disproportional number of larger commercial farms with states, such as West Virginia, that have more smaller ones.

A farm is any establishment from which $1,000 or more of agricultural products were sold or would normally be sold during the year. Source: 1992 Census of Agriculture.


Policies to preserve land in farming TAX PREFERENCES

Farmland in New England (and most other states) is taxed at its value in agricultural use, rather than at market value. This tax break reduces farmers' costs and may delay conversion for those who wish to continue in farming or hold agricultural land. But tax breaks have proved no match for the profits from conversion in areas under intense development pressure, and many analysts believe they have only a small, long-run impact. Tax breaks also may imply higher taxes or reduced services for others in the local community. Some states spread the cost by using aid formulas that depend on the taxable value of local property. Vermont has reimbursed local communities for lost revenue, but recently suspended the program when it became too expensive (it remains under review, mired in a larger debate about tax policy). Still, proponents contend that tax preferences, while no panacea, help maintain farmers' incomes and are an important tool for farm preservation. And they cite research showing that residential development might not generate tax revenue sufficient to cover the cost of additional city services.

PURCHASE OF DEVELOPMENT RIGHTS

Both the federal and state governments and private conservation trusts have set aside money to buy farmers' rights to develop their property. This type of easement "runs with the land," so future owners are also restricted from converting to commercial or residential use. Many analysts consider such programs more effective and less costly than tax breaks. The government or trust can select the lands it considers most important, and can decide if and when to resell the rights later on. But the dollars in these programs are relatively small. The federal government recently authorized $35 million to be spent nationally over six years. In New England, states have purchased rights to about 130,000 acres since 1977, at a cost averaging from $500 to $6,500 per acre, depending on the land's value in nonfarm use. Farmers also worry that by reducing the value of collateral, they may limit their ability to borrow in times of financial distress. Still, for many, the sale of development rights is their last resort.

PRICE SUPPORTS AND SUBSIDIES

Agricultural subsidies have chiefly aimed at maintaining farmers' incomes, but they may indirectly preserve farmland. The largest subsidies go to states that produce grain and livestock and receive the benefit of spending on irrigation. In New England, milk and other dairy items are the only major products subject to federal subsidy programs. The U.S. Department of Agriculture sets minimum prices that processors must pay dairy farmers. It also buys as much cheddar cheese, nonfat milk, and butter as manufacturers want to sell, at prices that return the support price to the farmer. Even so, New England lost 40 percent of its dairy farms and 30 percent of dairy acreage between 1982 and 1992, although some of these operations converted to other types of farming. In an attempt to stem the tide, all six state legislatures recently enacted the controversial New England Dairy Compact. The Compact authorizes a Commission (including representatives of producers, processors, and consumers) to set the regional price of fluid milk above the federal level. Proponents argue that this will preserve dairy farms and open space, without significantly raising retail milk prices. Others disagree, contending the Compact will lead to sharply higher milk prices and place a disproportional burden on poor families, while failing to halt the decline in New England's small dairy farms.

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