The Triumph of the Family Farm

Farming is in the midst of a startling renaissance—one that holds lessons for America’s economic future.
David Johnston

We buried my grandfather last spring. He had died in his sleep in his own bed at 95, so, as funerals go, it wasn’t a grim occasion. But it was a historic one for our small rural community. My great-grandparents were early settlers, arriving in 1913 and farming the land throughout their lives. My grandfather continued that tradition, and now rests next to them on a hillside overlooking the family homestead.

If you’re a part of the roughly 99 percent of the North American population that doesn’t work on a farm, you might guess at what comes next—many a lament has been written about the passing of the good old days in rural areas, the family farm’s decline, and the inevitable loss of the homestead. But in many respects, that narrative itself is obsolete. That’s certainly true in my family’s case: The Freeland farm is still being cultivated by my father. And it is bigger and more prosperous than ever.

My dad farms 3,200 acres of his own, and rents another 2,400—all told, a territory seven times the size of Central Park. Last year, he produced 3,900 tonnes (or metric tons) of wheat, 2,500 tonnes of canola, and 1,400 tonnes of barley. (That’s enough to produce 13 million loaves of bread, 1.2 million liters of vegetable oil, and 40,000 barrels of beer.) His revenue last year was more than $2 million, and he admits to having made “a good profit,” but won’t reveal more than that. The farm has just three workers, my dad and his two hired men, who farm with him nine months of the year. For the two or three weeks of seeding and harvest, my dad usually hires a few friends to help out, too.

My father farms in northern Alberta, but his story is typical of large-scale family farmers across North America. Urbanites may picture farmers as hip heritage-pig breeders returning to the land, or a struggling rural underclass waging a doomed battle to hang on to their patrimony as agribusiness moves in. But these stereotypes are misleading. In 2010, of all the farms in the United States with at least $1 million in revenues, 88 percent were family farms, and they accounted for 79 percent of production. Large-scale farmers today are sophisticated businesspeople who use GPS equipment to guide their combines, biotechnology to boost their yields, and futures contracts to hedge their risk. They are also pretty rich.

“It definitely is not just your father,” Jason Henderson, the vice president and branch executive of the Omaha branch of the Federal Reserve Bank of Kansas City, told me. Henderson is essentially the Fed’s top analyst of the agricultural economy. “In the U.S. and Canada in 2010 and 2011,” he said, “farm incomes have been booming. U.S. net farming incomes rose more than 20 percent in each of those years. Farmers are flush with cash.”

Evidence of the boom is visible throughout the Farm Belt. “Tractor and combine sales have doubled, compared with 2003,” Henderson told me. “Pivot-irrigation-system sales are up. I’ve been driving across Nebraska, Wisconsin, and Iowa, and I have not seen so many shiny new grain bins, ever.”

Troy Houlder, my father’s local farm-machinery dealer, told me that in the 22 years he’s been in the business, “supply has never been this tight.” The vehicles in highest demand, he said, are midrange-horsepower tractors, which run from $70,000 to $110,000. If a farmer walked into his store in early May wanting to buy that kind of tractor, “he’s not getting one until probably November or December, even if he had a fistful of hundreds.”

Big Money has noticed these trends, and is beginning to pile in. “We are seeing a tremendous uptick in allocations and interest in farmland,” says Chris Erickson of HighQuest Partners, an agricultural consultancy and investor. Erickson told me that big institutional investors—pension funds, insurance companies—have recently been making investments in farmland ranging from “the several hundred millions to the billions.” Erickson said this broad interest is new, and is driven by the fact that “the fundamentals are changing dramatically.”

Jim Rogers, who co-founded the legendary hedge fund Quantum with George Soros, told me he believes farming is “one of the most exciting professions” in the world—and that the recent boom is likely to continue for a long time. “Throughout history, we’ve had long periods when the financial sectors were in charge,” he said, “but we’ve also had long periods when the people who have produced real goods were in charge—the farmers, the miners … All of you people who got M.B.A.s made mistakes, because the City of London and Wall Street are not going to be great places to be in the next two or three decades. It’s going to be the people who produce real goods.”

The rural renaissance isn’t just a curiosity: it’s an important new chapter in the story of America’s ability to thrive in the global economy, and in eras of disruptive technological change. As America struggles to adapt to a new wave of creative destruction that is shaking up the manufacturing and service sectors as profoundly as industrialization transformed the agrarian age, the resurgence of the family farm offers some lessons on how we might survive this wave of change, too.

At the heart of the farm boom are the very same forces that are remaking the rest of the American economy—technological revolution and global integration. When you think of technological revolution, you probably think of geeks in cool coastal spaces like the Google campus, or perhaps of math wizards on Wall Street. But one source of rural prosperity is the adoption of radical new technologies—and a consequent surge in productivity.

Presented by

Chrystia Freeland is the editor of Thomson Reuters Digital. Her book Plutocrats will be published in October.

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