"Never make any decision without first looking seven generations to the past and seven generations to the future."

-Native American saying

Chapter II. An Introduction To Farming In The Upper Valley: Past And Present

2.1 INTRODUCTION

The purpose of this introductory chapter is to acquaint the reader with the fundamental properties and unique characteristics of the Upper Valley that have shaped the region’s farming into what it is today. This chapter presents the historical background of farming in New Hampshire and Vermont in an effort to achieve a better understanding of the evolution of agriculture in this area. Then, this chapter turns to discuss the current national trends in agriculture in order to give the reader a larger context in which to examine significant regional trends. The last section of this chapter focuses heavily on highlighting and analyzing recent trends in farming in the Upper Valley, as well as examining the current state of health and sustainability of the region’s agriculture through the analysis of data published in the New Hampshire and Vermont Censuses of Agriculture from 1950 to present.

2.2 THE HISTORY OF FARMING IN THE UPPER VALLEY

An analysis of the future sustainability of farming is not complete without knowledge of the past. Farming in the Upper Valley has a dynamic history. Over the centuries, farming has been shaped by the people who have inhabited the region, the progress and processes of industry and transportation, attitudes toward agricultural development, and economic concerns. Knowing that agriculture has shifted from Native American subsistence farming to the specialized commercial farming of today only scratches the surface of the tumultuous history of the rise and fall of agriculture in the area. In the past fifty years, the trends reveal a continuous decline in agriculture, while development in arenas such as residential and industrial growth flourish. (1)

Human occupation in the Upper Valley dates back to 1500 BC. with evidence of aboriginal migration and transient settlements along the Connecticut River. Permanent agricultural practices, however, first began with the resident Native American populations circa the 1500s. At that time, two Indian tribes predominated--the Iroquois and the Algonquins. These two tribes and presumably others in the area had a long tradition of cultivating crops such as corn, wheat, berries and squash. Agriculture existed on a relatively small scale in the Connecticut and Merimack River Valleys until the arrival and proliferation of the European settlers. (2)

By the early 1600s, European settlers began moving north from the established colonies of Massachusetts, Connecticut and Rhode Island. The lack of transportation and the untamed nature of the area prevented rapid migration, and kept settlers out of the Upper Valley region until the mid-1700s. Water routes were the primary modes of transportation into the area; the population was not large enough to merit forest clearing for road construction. In addition, the French and Indian War created insecurity for those families attempting to forge homesteads in the area--they were under constant attack from the French and Indian tribes. Settlers remained in the southern parts of New Hampshire and Vermont in order to avoid confrontation. After the Paris Peace Pact which ended the war in 1763, colonists were able to move north.(3)

These new settlers were purely subsistence farmers--they supported their families but did not market the crops. Most agricultural development took place on the hilltops of the valley where settlers believed that "the farmland was better, less swampy and more easily cleared."(4) However, this practice changed in the early 1800s. At this time, technological advances in farming and a growing population allowed the production of surpluses and a slow shift from subsistence to market-based farming. In addition, transportation in the area was booming--the long-standing mode of river transport was supplemented by the completion of turnpikes and other land routes. Therefore, it became possible to ship goods out of the region to the south. Wheat production increased to the point that the Connecticut River Valley was called the bread-basket of New England.(5) Farmers found additional profits in pork, butter, cheese and flour.

As a result of the economic prosperity, the population in the region hit its peak in the 1840s. Over the next decade, the population slowly declined and with it followed a decline in agricultural production. There were several reasons for the decline in the region. First, promises of farming productivity in the Midwest attracted many New England farmers, causing them to abandon their farms on the hills. Second, a rise in mill jobs in industrial centers contributed to the slow but massive evacuation from the region. Lastly, railroad expansion finally connected the Upper Valley to the rest of New England by 1871. At this time, the western farmers, who could produce grain and wool in bulk and more cheaply than the farmers in Vermont and New Hampshire, were able to ship their products to New England. Because the western farmers out-competed the producers in the area, certain forms of profitable agriculture in the region became a thing of the past.

One must closely examine why farming declined in the Upper Valley between 1840 and 1880, because the failures of our ancestors to farm sustainably can be an admonishment to current farmers. The early farmers in the region, as mentioned above, practiced sustainable farming--they grew and raised what livestock they needed in order to eat well and dress warmly. As soon as farmers realized that a profit could be made from surplus goods, sustainable methods were lost. In the history of the region, there have been booms and busts with various crops such as corn, wheat, potatoes and sheep raising. This region saw the rise and fall of several agricultural industries due to the pressures of changing markets; the economic markets led the way for profit seeking farmers to exploit the land with each new change in the nation’s demands.

At one time, New Hampshire and Vermont were famous for the quality of wool and corn produced in the area. The demand for high quality wool made many farmers in the Upper Valley wealthy. Yet, as soon as the railroads facilitated easy shipping from the west, the prices in the Upper Valley were driven down, and farmers left the market. Consequently, the land used for sheep grazing was exhausted from overexploitation. The clearing of forests for sheep grazing devastated the ecology of the Upper Valley. Erosion of soil and overgrazing impacts can still be seen today. As soon as the markets were not profitable for wool, the farmers left the industry, without considering the damage done to the environment. Furthermore, the farmers in the region were seemingly unaware of the importance of agrodiversity. By solely concentrating their efforts in one area with each new booming product, the farmers made themselves vulnerable. During the 1840s, a blight virtually destroyed the potato industry in New England.(6) Because farmers farmed unsustainably, engaging in monocultural production behaviors, and exhausting the natural resources of the area, their profits were short lived and many abandoned their farms. Clearly, farming in the Upper Valley in the early-mid 1800s fell victim to the booms and busts of the economic market, oblivious to the damage done to the local environment.

In the late 1800s, those farmers who remained in New Hampshire found it difficult to compete with the large scale midwest farms.(7) Following the Civil War, from 1880-1890, the number of farms in New Hampshire decreased by 60 percent and Vermont farms decreased by 50 percent. By 1890 in New Hampshire there were 1,440 abandoned farms.(8) Forests began to reclaim former farms and shade old stone walls.(9) In the period from 1810 to 1840, 75 percent of the land in Vermont was cleared and under cultivation. By 1900, following the population decline, 50 percent of that land had reverted back to forest. Today, 80 percent of Vermont is forested, most of this second growth forest over land that was once cultivated.(10)

The new railroad also contributed to increased industrialization in the Upper Valley. Towns such as Lebanon, Claremont and White River Junction became involved in iron, wool, textiles, machine tools, and wood-based productions. Commercialization of the region continued, when Lake Sunapee attracted wealthy individuals from the northeast cities as a resort area for summer homes.

These trends toward industrialization and commercialization of the regions scenic beauty continued into the early 1900s. Vacationers, artists, writers and others flocked to the Upper Valley in order to escape the cities. The boom in tourism and land development provided jobs to people in the area; economic prosperity returned to the region, although in a form different from agricultural success. By this time, the primary form of agriculture in the Upper Valley took the form of milk production and would remain the chief component of farm incomes for decades to come. After the 1920s, however, New England felt the hardships of the Great Depression. Many mills and manufacturers were forced to close. By the 1950s, industry as well as agriculture had experienced an ebb and flow of successes and failures. Today, neither is as important in the economy of the Upper Valley as they once were.

Today, the amount of land in agricultural production in the Upper Valley continues to decline, mostly due to residential and commercial development, industry, and reversion to forest. Between 1950 and 1970, the total number of farms in the region declined from 19,043 to 6,874. The percentage of the land in agricultural use between the same time period decreased by over 20 percent from 81,452 acres to 64,567 acres. By 1970, only 9.74 percent of the total land area in the Upper Valley supported agriculture. Developed lands, as in lands used for industry, residential, strip development, etc., increased by 83 percent between 1950 and 1970. Forests, however, occupy most of the land area, covering roughly 84 percent of the region. (11)

One cause of this loss of farmland to development is the pressure from population growth in the area (Figure 2-1). The population of the Upper Valley has grown steadily in the last 40 years, from 132,276 in 1950, to 193,275 in 1990. The fastest growth was between 1970 and 1980, but has slowed somewhat since then. All of the counties grew at comparable rates, with Grafton growing the fastest over the last 40 years with 56 percent growth, while Windsor county grew the slowest at 32 percent. The Upper Valley grew by 47 percent during the last 40 years, which is slightly less than the national growth over the same period of 64 percent.(12)

Today, with a larger population and fewer farms, most food sold in the Upper Valley is imported. In 1979, 85 percent of New Hampshire’s food came from out of the state. (13) Agriculture is clearly no longer the economic focus of the region nor a prevalent occupation choice. Yet farms are an integral part of the rural nature and the vistas of the Upper Valley countryside. In a region that in the mid 1800s largely consisted of cultivated hillsides, forest has returned to much of the area. Modern buildings are also sprouting up throughout the region, often in areas that once were farmland. Sustainable agricultural practices began in the Upper Valley when the first Native Americans broke the soil more than seven generations ago. However, these practices only lasted up until 150 years ago, as farmers attempted to make profits from agriculture. By learning from the mistakes and unsustainable practices which characterized the early-mid 1800s, perhaps farmers in the region today will be the wiser, sustaining agriculture for more than seven generations into the future.

Figure 2-1. Upper Valley Population Trends, 1950 - 1990. (Source: United States Bureau of the Census for NH and VT. vols. 17 - 21.)

2.3 THE CURRENT PICTURE OF FARMING IN THE UPPER VALLEY

2.3.1 Sustainability: What the Facts Reveal

The purpose of this document is to evaluate all aspects of the "sustainability" of farming in the Upper Valley. The concept of sustainability is elusive, though. Each discipline-specific chapter of this document begins by addressing the definition of sustainability from the perspective of that particular field, but the most logical first step in the search for the answer to the sustainability question is to look at the facts. Therefore, the rest of this introductory chapter focuses on examining both national and regional agricultural statistics and trends. With regard to numbers, at least, the answer is definitive: agriculture is not being sustained in the Upper Valley. By this we mean that farming statistics and trends indicate that agriculture in the Upper Valley is declining as an industry, as an occupation, and as a way of life. This is different from "sustainable agriculture," which refers more to the agricultural practices themselves and how they influence the health and longevity of the system. The latter concept of sustainability as it pertains to agriculture is the focus of Chapters V-VII, which examine the sustainability and effects of agricultural practices as related to specific disciplines.

Our purpose in the following sections is to clearly display the current trends and demographic statistics, and let them stand for themselves. We may only be able to provide limited explanations for some national trends, as that was not the focus of our research. Our research on agriculture has centered around the agricultural practices, characteristics, and limitations of New England, and specifically, the Upper Valley region. For any further statistics beyond what is provided in the body of this text, the reader may look to Appendix E for a table of selected agricultural statistics. One may also see Appendix D for a glossary of terms used in the text.

In the tables of rankings below, various states are represented alongside New Hampshire and Vermont to give the reader sources of comparison. We caution against making great extrapolations, since many of the interstate differences stem from the unique physical characteristics of the fifty United States (and the small physical size of New Hampshire and Vermont puts them at an immediate disadvantage in many state ranking scales). We do believe, however, that the examination of national trends and figures alongside the analysis of the Upper Valley data compiled from the Vermont and New Hampshire censuses of agriculture over the past decades will be valuable to the reader. The national and statewide trends and indices of agricultural health discussed in this section should provide a useful "measuring stick" against which local farming trends of the Upper Valley can be better evaluated.

2.3.2 Land-Use and Land-Value Change Indicators

The number of farms, their average size, and their longevity are the key variables in assessing the long-term sustainability of farming in the Upper Valley region. In our research to uncover and understand the trends that are rapidly changing the face of agriculture in this nation and in the Upper Valley, we examined several indices published in the states’ Censuses of Agriculture that, together, comprise a fairly comprehensive picture of the state of agriculture in area farming communities. The indicators fall under two general categories: land-use/land-value change indicators and income-related indicators. The former classification includes the changing percentages of farmland coverage, the average size of farms, the change in farmland property value, and farm ownership trends.

• Farmland Area

One of the most important issues regarding the sustainability of farming in the Upper Valley is the loss of farmland over the past half-century. With a decline in both the number of farms and the amount of farmland, infrastructure related to farming dissolves, and the trend continues in a positive-feedback cycle. Farming equipment is harder to purchase and must be transported long distances to the nearest repair shop, members of the small pool of trained labor are forced to look elsewhere for reliable, long-term places of employment, and transportation costs to markets rise. Therefore, the loss of farmland hurts all farmers in the region, and not just those forced to sell off or abandon farming on their lands.

In 1950, 1,130,409 acres, or 45 percent, of land in the Upper Valley was used as pasture land, cropland, and grazing land. By 1992, that number had fallen to just 297,179, a decline of nearly 75 percent. In fact, the total acreage in farming declined in every Agricultural Census period from 1950 to 1992 (Figure 2-2).

Figure 2-2. Number of Acres in Upper Valley Farmland, 1950-1992. (Source: US Department of Agriculture, Census of Agriculture, 1950-1992).

Two trends appear in an examination of changes in farmland over the past 50 years. First, there is a sharp decline in farmland acreage in the 1950s and 1960s, followed by a leveling off period in the 1970s. Farmland acreage remained relatively constant from the mid-1970s to the mid-1980s, followed by a recent trend of farmland acreage decline in the past 15 years. From 1950 to 1969, the number of acres in farmland declined sharply. In fact, 78 percent of the decline in farmland acreage over the 4 decades took place in this first 19 year period. Between 1974 and 1982, the number of acres in farming appeared to bottom out at around 400,000 acres. The decline in farmland acreage in the 1950s and 60s can not be explained by a single factor. Rather, it was caused by a combination of the growth of large agro-businesses in the Midwest, a decline in prices for long-distance transport of perishable foods, and an increased reliance on international markets. Farmland coverage of the Upper Valley has dropped significantly in the decade between the census years of 1982 and 1992 (Table 2-1). In 1992, farmland covered 11.9 percent, or 297,179 acres, of the Upper Valley’s total land (2,503,245 acres). Both of the New Hampshire Upper

Valley counties experienced a 1 percent loss of farmland from 1982-1992, and now combined, are 8 percent farmland. Vermont faced a more severe decline between the ‘82 and ‘92 census years.

The two counties on Vermont side of the Upper Valley experienced a combined decline of 5.8 percent in farmland coverage (from 23 percent in 1982 to 17.2 percent in 1992). These figures

translate into the loss of one-quarter of the 1982 designated farmland in the Vermont counties.

This negative trend is consistent with both state and national trends. In 1980, half of the United States was designated farmland (this definition includes pasture land, grazing land, and cropland). Between 1980 and 1993, the United States averaged a 5.9 percent decline in farmland (the nation dropped from 1,039,000,000 acres of farmland to 978,000,000 acres). Vermont, ranking 42nd in the nation in farmland coverage (at roughly 2 million acres) did not experience a significant decline, while New Hampshire (ranked 48th, with 1 million acres in 1980), lost 50 percent of its farmland during the same period and dropped to only 500,000 acres by 1993. Nearby states of Maine, Massachusetts, and New York experienced significant declines as well (50 percent, 30 percent, and 11 percent respectively).(14)

Table 2-1. Farmland and Total Land Acreage of the Upper Valley and Its Counties

County

Total Acres

Acreage of Farmland, 1992

Farmland as % of Total Land

Percent Change from 1982-1992

Grafton (NH)

1,096,642

75,733

7%

-1%

Sullivan (NH)

343,967

38,297

11

-1

Windsor (VT)

621,645

89,785

14

-4

Orange (VT)

440,791

93,364

21

-9

Upper Valley Sum

2,503,045

297,179

12

-3

(Source: U.S. Department of Agriculture, 1992 Census of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, U.S. Department of Commerce, 1994 and U.S. Department of Agriculture, 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1994.)

In the 1990's, there has been a small but noticeable shift in the national population involving a migration away from the urban centers and back to the countryside. The result has been an increase in development pressures on many small towns which traditionally were heavily involved in agriculture. The major problem for farmers and developers alike is that farmland can often be prime land for the construction of homes and residential developments; the land is already cleared, often has a good view of the surrounding countryside, and has soft soils conducive to easy installation of septic systems. For all of these reasons, agricultural land is highly valued by developers, and therefore has a high market value. Although development pressure has always exerted an influence on farmers and their land, this pressure has increased with the rural migration of the past decade, and does not appear to lessen any time soon.

• Size of Farms

"The number of farms declined in the United States, but the average size of farms increased, reflecting the trend toward consolidation and away from the family farm."(15)

The trend for farm size in the Upper Valley differs somewhat from the national movement towards larger farms, even though this region is, like many others, moving slowly towards consolidation and away from small-scale family farms (Figure 2-3, also see Ownership Structure

Figure 2-3. Upper Valley Farms Classified by Size. (Source: US. Department of Agriculture, 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, US. Department of Commerce, 1984, 1989, 1994; and US. Department of Agriculture, 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1984, 1987, 1994.)

section below). Only medium and large farms have shown a decrease in number, without an apparent increase in small farms to replace the loss of farms with higher acreage. Farms sized between 180 to 499 acres have decreased significantly (631 in 1982 to 487 in 1992, a decrease of 22 percent). This is accompanied by a more significant downward trend of the number of farms between 500 and 999 acres, which dropped by 27 percent (133 in 1982 to 97 in 1992). Finally, the farms with land holdings of over 1,000 acres have also exhibited a decline in number (21 in 1982 to 16 in 1992). (16) The number of acres per farm in the Upper Valley is decreasing at a higher rate than the number of farms.

There is no clear trend in average farm sizes for the farmers in the densely populated Northeast; the states were fairly evenly split between a relatively small positive or negative change in the average acreage of farms (Table 2-2). Among Northeastern states, Massachusetts farms decreased in size the most, at 15 percent, and New York farms increased in size the most, at 7.9 percent. Even the Vermont and New Hampshire state trends differed in direction.(17)

Table 2-2. Acreage Per Farm for Selected States

State

National Ranking of Farm Size- 1993

1993 Acreage Per Farm

Percent Change, 1980-1993

Arizona

1

4,557

-10.29

Nevada

3

3,708

19.62

Vermont

31

219

-3.17

New York

33

216

7.90

Maine

37

200

2.56

New Hampshire

41

174

8.80

Massachusetts

49

98

-15.10

United States

-

473

11.01

(Source: Ellen Meltzer. The New Book of American Rankings, Revised Edition. New York: Facts On File,

Inc., 1998, p. 174)

Logically, there are vast regional differences in the average acreage per farm, favoring Mid- West and Western states with large ranches and grazing land for livestock. There is also a general correlation between the state’s average farm size and the region’s principal agricultural land use (Southern and Northeastern farms that specialize in dairy, poultry, and fruit and vegetable production contribute to lower state acreage averages than the Midwest grain farms and the large Western rangelands). As will be discussed below, there is a strong inverse correlation between the average size of farms and the average value of farmland, largely reflecting the great property value discrepancies among different regions in the United States.

• Value of Land and Buildings Per Acre

The estimated value of farmland and buildings is extremely useful as an indicator of changing property values in the general region, and a steep rise in farmland values may be an alert that nearby residential development and urban expansion are probably creeping into regions that have traditionally been agricultural land. The value of farmland has risen dramatically in all four Upper Valley counties, with Sullivan County at the extreme (in one decade, the average per acre value of farmland has almost doubled). Table 2-3 highlights the differences among Upper Valley counties in the per acre value of farmland. New Hampshire generally has higher property values than Vermont because of its closer proximity to the large cities of Massachusetts. The per acre property values of farmland are compared in a national context in Table 2-4.

The rise in property rates in the two New Hampshire counties of the Upper Valley were below the state average trend of a doubling of property values. This is likely because the New Hampshire counties closest to the Massachusetts state line experienced the most significant growth in value. The Vermont county of Windsor has the highest per acre value of farmland of all four counties. This discrepancy can be explained by the smaller average size of Windsor farms as opposed to New Hampshire farms--when the value of buildings are averaged over a smaller number of acres, the overall per acre value of farm property obviously remains larger. The average size of Grafton County farms is larger than the other three counties, yet the county’s value per farm is not the highest, as we would expect. This may be a result of lower development pressure for expansion or less valuable land characteristics.

Table 2-3. Value of Upper Valley Counties’ Farmland and Buildings: Per Farm and Per Acre

County

Market Value of Land and Buildings, 1992 Average Per Farm ($)

Market Value of Land and Buildings, Average Per Acre ($)

Percent Change of Per Acre Farmland Value, 1982-1992

Grafton (NH)

$306,654

$1435

67%

Sullivan (NH)

375,603

1735

95

Windsor (VT)

324,043

1815

84

Orange (VT)

267,669

1309

51

(Source: U.S. Department of Agriculture, 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, U.S. Department of Commerce, 1984, 1989, 1994; and U.S. Department of Agriculture, 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1984, 1987, 1994.)

As stated above, the ranking methodology of this indicator favors small farms--because the value of buildings on the property are averaged over fewer acres, but also because a smaller state average for farm size is often indicative of higher statewide property values. Strong evidence for this are the five states with the highest percent changes in land values (Rhode Island, New Jersey, Connecticut, Massachusetts, and Maryland): all five states border metropolitan areas, where urban sprawl continues to drive up property values. Put under continual pressure through the expansion

of residential areas for state residents and "seasonal" homes for vacationing New Englanders, New

Hampshire and Vermont are close to the top, too.

This development pressure has dramatically increased the per acre value of farmland in New Hampshire and Vermont (117 percent and 61 percent, respectively), during a period in which the value of farmland nationwide declined slightly. The dominating national trend for farmland was a decrease in the value of agricultural land during the 1980s (due to the agricultural recession), followed by an increase in the early 1990s as agricultural sales improved.(18) The rise in property values in both New Hampshire and Vermont--and indeed, many other New England states--illustrates the growing opportunity cost of farming in the densely populated Northeast, given the returns some farmers could receive if they sold their valuable land to developers.

Table 2-4. Average Value of Farmland and Buildings Per Acre for Selected States

State

National Ranking in Value/Acre, 1993

1993 Average Value/Acre

Percent change, 1980-1993

Rhode Island

1

$4,894

+94.0%

Massachusetts

4

3,662

+127.7

New Hampshire

7

2,178

+116.9

Vermont

17

1,158

+60.6

New York

19

1,119

+55.4

Maine

22

992

+67.0

Wyoming

48

149

-7.5

United States

-

700

-5.0

(Source: Ellen Meltzer. The New Book of American Rankings, Revised Edition. New York: Facts On

File, Inc., 1998, 174.)

• Ownership Structure of Upper Valley Farms

The Upper Valley is following the national trend of moving away from family farms and more towards consolidated farming entities. Small-scale farms appear to be doing well in the Upper Valley: eighty-eight percent of all Upper Valley farms are currently owned by individuals or families (for a 1992 total of 1337 farms). This type of farm dwarfs all other farm ownership structures: partnerships are the next largest ownership structure, at only 7 percent (110 farms), and family-owned corporations are at 4 percent. Together, co-ops, estates, and trusts constitute 1 percent of the region’s farms, and corporations, at a 1992 figure of 3, hold 0 percent.

Taken alone, the ownership structure percentages for 1992 can mislead one about the health of small, family-owned farms. Although individual and family-held farms were by far the most numerous in 1992, they suffered a 20 percent decrease in one decade (Figure 2-4). This negative trend is a clear indication that small-scale farming is not being sustained. Further support of this stems from the growth of family-owned corporations by 58 percent during the same time period. Whether the rise in family-owned corporations was due to individual farm owners deciding to consolidate to stay competitive or to groups of families entering into agriculture as their own ‘corporation’ is unclear. Regardless, the rise in family corporations in the face of a significant fall in the number of small-scale family-owned farms indicates that family consolidations are, for whatever reason, attractive. We might further speculate that family corporations may be more efficient (given economies of scale), and therefore more competitive and profitable than small-scale family farms, making them more attractive for small-scale or start-up farmers.

Figure 2-4. Farm Ownership Structure Trends, from 1982-1992. (Source: U.S. Department of Agriculture, 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, U.S. Department of Commerce, 1984, 1989, 1994; and U.S. Department of Agriculture, 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1984, 1987, 1994.)

2.3.3 Income-Related Indicators

The second category of agricultural sustainability indicators presented in this chapter are related to the financial profits and costs associated with farming in both the nation and the Upper Valley. These include the agricultural diversity of the region (this is evaluated through the examination of both the top grossing commodities and the diversity of the Standard Industrial Classification breakdown in the region’s farms), gross farm income, taxes, government payments, production expenses, farm marketing income, net income, and percent profit to farmers.

• Top Commodities and Agricultural Diversity

Agriculture in Vermont is in an incredibly unique and vulnerable position. The agriculture industry of Vermont is more dependent on one commodity (i.e. dairy) for its revenues and survival than any other state in the nation, largely due to the state’s numerous dairy creameries and the massive volume of demand from the production facilities of one of the nation’s largest ice cream companies, Ben & Jerry’s (Table 2-5).(19) In 1991, Vermont ranked 15th in the nation in milk production, providing 1.62 percent of the nation’s milk supply.(20) (New Hampshire ranked 44th.)

Table 2-5. Top Five Grossing Commodities in New Hamphshire and Vermont, 1997-98

New Hampshire

Vermont

Commodity

Millions ($)

Commodity

Millions ($)

Dairy Products

$50

Dairy Products

$393

Greenhouse/Nursery

40

Cattle/Calves

34

Apples

9

Greenhouse/Nursery

31

Cattle/calves

7

Maple Products

15

Sweet Corn

6

Christmas Trees

12

(Source: USDA-New England Agricultural Statistical Service, Statistical Highlights 1997-98: Farm

Economics, <http://www.usda.gov/nass/pubs/stathigh/1998/nass1.htm#top> Accessed 1 May 1998.)

Excessive dependence of either state’s agricultural industry on one or two commodities is dangerous, because it increases the possibility of a collapse of the entire agricultural system in the region if indeed the market of one of the top commodities crashed, or if another region (or nation) became a more competitive producer. The Upper Valley region has already witnessed a massive disintegration of the agricultural industry, with the collapse of sheep farming in the 1800s (see section 2.2). Therefore we emphasize that diversity in the agricultural industry is a key component of both its stability and sustainability.

Farming in the four counties of the Upper Valley is divided more equitably among the commodities in production than it is in the two states, although it is still heavily animal-based. The assessment of the diversity of Upper Valley farming is made possible through the examination of Standard Industrial Classification (SIC) farming category breakdown and recent trends. All agricultural production establishments (farms, ranches, nurseries, greenhouses, etc.) are classified by type of activity or activities using the Standard Industrial Classification system. (These classifications are used to promote uniformity and comparability in the presentation of statistical data collected by various agencies.) An establishment primarily engaged in crop production or production of livestock and animal specialties is classified in the industry group which accounts for 50 percent or more of the total value of sales of its agricultural products.(21)

This assessment serves several purposes. First, it familiarizes the reader with the most common types of farming in the region. Secondly, this classification system also has a separate index for farms with sales that equal or exceed $10,000; thus a comparison of SIC categories for farms in this upper sales bracket with the SIC breakdown of all farms in the Upper Valley gives us insight into which kinds of farming are the most profitable and prevalent as large-scale operations. Third, any distinct declining trends in certain SIC categories may be alert us to the possibility that some specific types of farming may be unsustainable.

The Standard Industrial Classification (SIC) trends between 1982 and 1992 differ for the two categories of Upper Valley farms based on gross income revenues (below or above $10,000 gross sales). While there was an overall decrease in this region’s number of field crop farms by 22 percent, the number of large field crop farms (i.e. those that had sales over $10,000) more than tripled. A similar shift away from small farm production is seen in horticultural specialties as well. The three most prevalent farm classifications (livestock, beef cattle, and dairy farms) increased dramatically for all Upper Valley farms, but their trends for the large farms are not linear. Large livestock and beef cattle farms (i.e. those with sales that exceeded $10,000) had both declined in number by 1987 but rose above their 1982 levels by 1992. Large-scale dairy farming in the Upper Valley has clearly decreased, with a 36 percent decline in a decade (offset by a 54 percent increase of small scale dairy farms in the same time period).

As can be clearly seen from Figure 2-5, which depicts the relative percentages of all Upper Valley farming classifications, livestock (30 percent), beef cattle (19 percent), and dairy farms (31 percent) are the three most numerous types of farms in this region. Other significant classifications include field crops, general farms, and animal specialties. In contrast, the 1992 percentages of SIC classifications for large Upper Valley farms (with sales of $10,000 or more) are more unequal. Even though there is a declining trend of large-scale dairy farms, that SIC classification still constitutes 54 percent of large Upper Valley farms. Other significant classifications for large scale farms in the Upper Valley are livestock (11 percent), horticultural specialties (8 percent), field crops (8 percent), and beef cattle (8 percent).(22) Thus a comparison between the SIC breakdown for all Upper Valley farms and the SIC percentages of only those farms that gross more than

Figure 2-5 Standard Industrial Classification Percentage Breakdown for Upper Valley Farms. (Source: U.S. Department of Agriculture, 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, U.S. Department of Commerce, 1984, 1989, 1994; and U.S. Department of Agriculture, 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1984, 1987, 1994.)

$10,000 quickly reveals the prevalence of dairy farming in both small and large scale operations and the dependence of farming in the entire region on animal-based farming products.

• Gross Farm Income

Profitability is an important component of any definition of sustainable agriculture in the Upper Valley region. The next several indicators in this chapter will present an overall assessment of the economic health of Upper Valley farms. Gross farm revenue is the starting point; it is, by definition, the initial income before deducting taxes, paying overhead and labor, incurring any losses, etc. From there, we evaluate trends in state and local taxes, production expenses, government payments, farm marketing income (income from direct sales of agricultural products before government payments, an indicator of farms’ self-sufficiency), and finally the net income that farmers take home, which is the ultimate indicator of agriculture’s profitability in the region. Viewing these economic indicators in this manner allows us to assess whether farming in this area is just not a viable income-generator (i.e. gross farm incomes are excessively low), or whether the overhead costs of farming and the lack of substantial government investment in the area’s agriculture turn gross income figures into minimal take-home profits for Upper Valley farmers.

Over the past the ten years, there has been a large decrease in the number of small-scale farms, a moderate rise in mid-range grossing farms, and variable trends for the farms in the largest grossing categories (Figure 2-6). A 24 percent decrease in number of farms with the smallest

Figure 2-6. Upper Valley Farms by Value of Sales. (Source: U.S. Department of Agriculture. 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data. U.S. Department of Commerce, 1984, 1989, 1994; and U.S. Department of Agriculture. 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data. U.S. Department of Commerce, 1984, 1987, 1994.)

value of sales (at or under $2,500) leads us to conclude that very small-scale and hobby farming is

not sustainable. However, the most significant reduction in farms is for those in the sales bracket of $50,000 and $99,999, which decreased by 48 percent. There have been small increases in the number of farms in some sales brackets, specifically in farms with sales between $5,000 and $25,000. A positive trend in farms grossing $100,000+ seems to be apparent over the ten years observed in this graph (195 in 1982 to 218 in 1992), a growth trend which illustrates the viability of profitable, large-scale consolidations and agribusinesses.

Put in a national context, Vermont fares especially well with regard to growth of gross farm income. The state average has increased by a greater percentage increase than the national average percent increase between 1988-1992, indicating a healthy, profitable state industry (Table 2-6). While the average gross farm income has risen in New Hampshire as well, the percentage increase is not keeping pace with the national average, which suggests a less vital agricultural industry. In Table 2-6, the states are ranked by the percent change in their farm income from 1988-1992.

Table 2-6. Gross Farm Income, in 1992 Figures

State

National Ranking

1992 Gross Farm Income ($ millions)

Percent Change, 1988-1992

North Dakota

1

3,809

44.59%

Massachusetts

11

556

16.51

Maine

12

550

16.49

Vermont

13

529

16.35

New York

21

3,174

12.91

New Hampshire

40

184

5.09

Rhode Island

49

80

-10.57

United States

-

197,741

12.48

(Source: Ellen Meltzer. The New Book of American Rankings, Revised Edition. New York: Facts On

File, Inc., 1998, 175.)

• Farming and Production Expenses

Animal-related purchases are by far the most significant production expense for Upper Valley farmers (Figure 2-7). This is not surprising, given that approximately 80 percent of Upper Valley farming is animal-based. Feed for livestock is not only the greatest expense to Upper Valley farmers, but it also affects the most farms, since 1042 farms reported this as an expense. (23) Any policy aimed at reducing farm expenses may want to consider reducing this expense, since this has the potential for the greatest impact. Labor costs, interest/tax costs, energy costs, and equipment maintenance are also significant production expenses for farmers.

The percentage make-up of farm expenses has remained relatively stable over the past decade. One noticeable trend, though, is that expenditures on seeds, plants, and trees have risen from $497,000 in 1982 to $1,907,000 in 1992, a 384 percent increase. Most of the difference has occurred in the last five years. This may be a result of a growing presence of greenhouses in the Upper Valley. Surprisingly, the number of farms listing this as an expense has decreased from 656 to 472, a 28 percent decrease, which may stem from the elimination of small-scale greenhouse

Figure 2-7. Percentages of Farm Income Devoted to Various Farm Expenses. (Source: U.S. Department of Agriculture, 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, U.S. Department of Commerce, 1984, 1989, 1994; and U.S. Department of Agriculture, 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1984, 1987, 1994.)

production from farms who only grew minimal seeds and crops on the side. Other differences are small and are likely the result of normal fluctuations.

• State and Local Taxes

Property taxes are a significant expense for Upper Valley farmers, comprising 10 percent of total production expenses (Figure 2-7). Further, many farmers contacted during case study interviews during research for this project listed high property taxes as one of the costs that make farming less profitable (see Case Study Boxes 2 and 10). State and local taxes per acre of farmland are valuable indices of agricultural sustainability, because higher statewide property taxes are an indication of high statewide property values (similar to the index of state averages of farmland and buildings per acre). It is safe to conclude that many states with high property taxes are in or nearby urban and developing areas; therefore farms in the states ranked at the top of this index are probably under varying degrees of pressure to develop. A similarity in the state rankings between Table 2-7 and the indicator of Value of Farmland and Buildings (Table 2-4) illustrates the positive correlation that frequently exists between property values (a function of both the state’s average physical size of farms and the population density of the states) and property taxes as well as the high property taxes Upper Valley farmers must pay relative to other regions in the nation.

Table 2-7. Average State and Local Taxes per Acre of Farmland

State

National Ranking

1993 Average Taxes/Acre, $

Rhode Island

1

$48.22

Massachusetts

4

26.73

New Hampshire

6

21.13

New York

7

19.11

Vermont

12

14.43

Maine

17

9.52

Wyoming

47

0.70

United States

-

5.27

(Source: K. Morgan, State Rankings 1993: A Statistical View of the 50 United

States. Kansas: Morgan Quitno Corporation,1993, 15.)

• Government Payments

The agro-economic index of government payments to farmers is extremely useful because the amount of payments for a single year can be compared across states (and regions); further, that taken together with the Farm Marketing Index (discussed below), trends in government payments to states’ agricultural industries can provide some indication of the health and self-sufficiency of various agricultural communities. Government payments to Upper Valley farmers were also only available for 1987 and 1992 (Figure 2-8). These two years suggest a strong downward trend, though, in the amount of government payments given to Upper Valley farms. While the number of farms receiving government payments increased, the amount of money given to each farm decreased drastically. One could speculate that the reduction in government payments to Upper Valley farmers is a result of their increased self-sufficiency and the increase in profitability of farming in the area--the gross farm incomes in both New Hampshire and Vermont did increase, after all (Table 2-6). However, as will be discussed in the next section, both New Hampshire and Vermont still heavily rely on government payments as a significant percentage of their income relative to other states. Therefore, the reduction of $4,947 in government payments to Upper Valley farms--which was phased in over a period of just 5 years--may make agriculture a much less viable livelihood for area farmers.

Figure 2-8. Government Payments to Upper Valley Farms in 1987 and 1992. (Source: U.S. Department of Agriculture, 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, U.S. Department of Commerce, 1984, 1989, 1994; and U.S. Department of Agriculture, 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1984, 1987, 1994.)

The decrease in federal income supplements to Upper Valley farmers is part of a national trend. The United States government began heavily reducing subsidy payments to farmers in the late 1980s in an effort to return closer to a free market in agriculture, as can be clearly evidenced by the 1.7 billion dollar reduction in government expenditures to farmers (Table 2.8).(24) Generally, government payments dropped fairly significantly for most of the Northeastern, Midwestern and Southern states (e.g. Pennsylvania, Illinois, Missouri), although some states did receive slightly higher payments in the early 1990s than in the late 1980s (e.g. Maine).

At first glance, the 1988-1992 change in government payments to farmers does not appear terribly significant for New Hampshire and Vermont. This table can be misleading, however, because the 1989-1992 change in government payments is in millions of dollars, not as a percentage. By comparison, New Hampshire and Vermont both appear to have received only a fraction less in 1992 than what the states received in 1989. While the numbers themselves are much smaller compared to the reductions of government payments to Midwestern and Southern

Table 2-8. Government Payments to Farmers

State

National Ranking

1992 Payments ($ millions)

Change, 1989-1992 ($ millions)

Texas

1

1,162.04

-86.67

Iowa

2

662.28

-318.93

New York

34

47.87

-28.15

Maine

41

10.25

3.11

Vermont

43

5.55

-1.51

Massachusetts

44

4.76

0.90

New Hampshire

49

1.55

-0.75

United States

-

9,168

-1,719.00

(Source: Ellen Meltzer. The New Book of American Rankings, Revised Edition. New York: Facts On

File, Inc., 1998, 177.)

states, the fractions are actually quite large. Government payments to Vermont declined by 21.4 percent between 1989 and 1992, and federal payments to New Hampshire farmers decreased 32.6 percent during the same four year time period. In 1992, Upper Valley farmers received on average only $2,607 from government payments, a 66 percent reduction from the average payment only five years earlier (Figure 2-8). Such a significant reduction in government payments may have virtually erased the profit margin and hence the viability of agriculture for many of the region’s farmers.

• Farm Marketing Income

State averages for farm marketing income is extremely significant because it measures the self-sufficiency of a state’s farms. ‘Farm Marketing Income’ is income generated solely from directly marketing crops and livestock; it is a measure of total farm revenues before government payments. Therefore, the higher farm marketing income is as a percentage of gross farm income, the less reliant the state farms are on government payments for revenues (Table 2-9). Both Vermont and New Hampshire are below the national average in terms of self-sufficiency measured by farm marketing income. Vermont ranks 25th in the nation, while New Hampshire has one of the lowest figures of marketing income as a percentage of total income--on average, New Hampshire farms rely on government payments for nearly one-quarter of their revenues.(25) Given this heavy reliance on government assistance, the 66 percent reduction in federal payments to Upper Valley farmers between 1987-1992 takes on a new significance for the viability and profitability of agriculture in the region.

 

Table 2-9. Farm Marketing Income, in 1992 Figures

State

National Ranking

Gross Income

($ millions)

Marketing Income ($ millions)

Marketing as Percentage of Gross Income

Nevada

1

268

273

101.94%

Maine

6

550

513

93.26

New York

8

3,174

2,946

92.81

Rhode Island

15

80

72

89.82

Massachusetts

18

556

491

88.35

Vermont

25

529

452

85.46

New Hampshire

48

184

144

78.38

United States

-

197,741

171,168

86.56

(Source: Ellen Meltzer. The New Book of American Rankings, Revised Edition. New York: Facts On

File, Inc., 1998, 178.)

• Net Farm Income

All of the income-related indices presented in this section are indicators of the economic sustainability of agriculture and together, they comprise the overall state of the economic health of agriculture both in the Upper Valley region and in the nation. After production expenses and taxes are subtracted from farms’ gross incomes (comprised of marketing income and federal payments), the remaining revenues are the net cash returns to farmers. This is the final index of the economic sustainability of farming in the Upper Valley presented in this chapter, and it pulls together all of the indicators examined in this section. The figures and trends of this comprehensive indicator of profitability lead us to conclude that, quite clearly, farming is not an economically sustainable industry in the Upper Valley region.

Unfortunately, census data on cash returns for the states of New Hampshire and Vermont are only available for 1987 and 1992. However, the data suggests that there is a strong downward trend in net cash returns to Upper Valley farms, which is not surprising given the heavy reductions in government payments over the same time period (Figure 2-9). Specifically, the number of farms making net gains has decreased; further, farms with net gains are making smaller gains while those with losses have greater losses. (26) In 1992, 60 percent of Upper Valley farms were losing money. Additionally, the average net return for all farms, which was already small in 1987, at $6913, dropped even further to $4707 in 1992. With this fine margin of safety, any differences in income or expenses could have a great impact on the economic sustainability of farming in the Upper Valley.

Figure 2-9. Net cash returns to Upper Valley Farms for 1987 and 1992. (Source: U.S. Department of Agriculture, 1982,1987, & 1992 Censuses of Agriculture, Volume 1: Geographical Series; Part 45, Vermont: State and County Data, U.S. Department of Commerce, 1984, 1989, 1994; and U.S. Department of Agriculture, 1982, 1987, & 1992 Census of Agriculture, Volume 1: Geographical Series; Part 29, New Hampshire: State and County Data, U.S. Department of Commerce, 1984, 1987, 1994.)

Vermont and New Hampshire rank relatively low on the nationwide scale of net farm income (Table 2-10). This is to be expected, given the size of the states and the number of farms relative to the biggest agricultural states in the country. Table 2-10 shows the net income to farmers, after all taxes, production expenses, outlays, and losses have been paid. Many states’ profits declined during 1988 and 1992, reflecting the impact of local conditions and the market for the major commodities produced in those states.(27) The percent profit that goes back to farmers is similar for New Hampshire and Vermont, and both states are around the national average of 25 percent profit. However, New Hampshire farmers’ percent profits decreased by 4 percent from 1988 to 1992, while the percent profit to Vermont farms increased by 2 percent in the same time period.

Table 2-10. Net Farm Income, in 1992 Figures

State

National Ranking

1992 Net Farm Income ($ millions)

Percent Profit

Percent Change, 1988-1992

California

1

4,756

24%

-9%

Texas

2

3,464

24

8

New York

26

622

20

1

Massachusetts

42

200

36

2

Maine

43

138

25

3

Vermont

44

133

25

2

New Hampshire

48

45

24

-4

United States

-

48,647

25

3

(Source: Ellen Meltzer. The New Book of American Rankings, Revised Edition. New York: Facts On File, Inc., 1998, 176.)

2.4 CONCLUSION

In this introductory chapter, we have presented the figures and trends of various land-use and income-related indices that, together, comprise a fairly comprehensive picture of the economic viability of farming in the Upper Valley. A working knowledge of these statistics is vital to understanding the sustainability of farming in the region. Even if the ecological and cultural components of agriculture, which are discussed in later chapters of this report, are healthy and lead us to the conclusion that regional farming practices are sustainable, the statistics and trends indicate that agriculture is not being sustained in the Upper Valley. Hundreds of thousands of farmland acres have been lost in the Upper Valley during the last half of this century, and tens of thousands have disappeared just in the last decade. The actual number of farms in the region has significantly decreased as well. Small-scale farming in particular is becoming much less viable, probably because it cannot stay competitive against large consolidations and agribusinesses. The value of farmland in all four Upper Valley counties has increased dramatically, which makes selling farmland to developers more profitable than ever.

The rise in New Hampshire and Vermont property values of what has traditionally been rural farmland is largely due to development pressures to expand residential areas for the states’ growing populations and to meet the tourist demand for lodging. Higher property taxes accompany high property values, which may diminish or virtually eliminate the margin of profitability for landowners still primarily engaging in farming, as they are continuing to pay more for property taxes while still generating a relatively stable income from cultivating a finite amount of land. Moreover, although gross revenues have risen over the past decade for New Hampshire and Vermont farmers, increases in revenues in the former state still lag behind the national average. Animal-related expenses, labor expenses, interest payments and taxes take up 70 percent of total farm expenses, and are continuing to rise. Although Vermont and especially New Hampshire are relatively dependent on government payments as a significant percentage of their gross income, federal payments decreased by almost two-thirds at the turn of this decade. In 1992, 60 percent of Upper Valley farms were losing money. Further, the average net return for Upper Valley farms dropped significantly from 1987 to 1992. Finally, Vermont’s heavy dependence on dairy, and indeed the entire Upper Valley’s dependence on animal-related agricultural commodities, put the region’s agricultural industry in a fairly vulnerable position. If the meat and dairy markets failed, there very well may be a collapse of farming in the region similar to what was witnessed a century ago in response to the demise of the New England sheep industry.

 

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