The 2012 Census of Agriculture paints a rosy picture for the economics of agriculture in the Dakotafire region.
Actually, the picture is beyond rosy. You could call it golden.
Sales of farm products increased by a staggering 93 percent from 2007 to 2012, to $3.6 billion in crops and livestock sold in 2012.
Plug these numbers into the long-term trend of farmers’ income, and farmers in the Dakotafire region are making 130 percent more than they were in 1969, even adjusted for inflation.
In 2012, area farmers rolled the dice in terms of seed choices, weather and global market conditions (as they do every year) and came up with all sixes: While other parts of the country and the world dealt with persistent drought, which had a role in increasing crop prices to record levels, area farmers brought in stunning yields. For many farmers, it was the year they’d dreamed of: Everything went right.
So, readers: Did you feel it?
You’d think if our dominant industry of agriculture was doing so well, the region in general would be doing pretty well also.
How is your bank account? Did you see a big bump from 2007 to 2012?
How about our communities—are they doing significantly better over those five years? Would you say they are better off and more vibrant?
And your health and diet: Since area agriculture was booming in 2012, were you eating more healthful food, and getting it at better prices, than you were in 2007?
Some of you probably saw better finances, healthier eating and more vibrant communities. But the data suggests that many of you answered “no” to all of them.
The data also suggests that it’s possible to do agriculture in a way that ensures more people answer “yes” to those questions. It starts with two words.
Looking at the numbers
To understand the potential that local food purchases have for the region, Dakotafire Media contracted with Crossroads Resource Center, a nonprofit based in Minneapolis and run by food systems analyst Ken Meter, to do an analysis of data about the 12-county region that Dakotafire currently covers. Much of that data came from the Bureau of Economic Analysis and the recently released 2012 Census of Agriculture.
(See the full report here.)
Over the years 1989-2012, on average, farmers in the Dakotafire region sold $1.7 billion of food commodities per year. They also spent $1.5 billion per year to produce those commodities.
- Counties covered in this report
Lots of the money that farmers are spending is leaving the area—farmers spend $900 million buying inputs sourced from outside of the area.
But hey, you have to spend money to make money, right? And local farmers are still making money.
From the years 1989 to 2012, Dakotafire farmers made an average of $186 million a year—which averages out to $26,000 per farm.
Most of that income, however, came in the last few years. Consider just the stellar year of 2012, when farm receipts totaled a whopping $3.6 billion, and farmers spent $2.4 billion to produce those commodities. That means farmers in the Dakotafire region cleared a profit of more than $1 billion in just one year.
(Cue the “We’re in the Money” song.)
So the picture captured by the 2012 Census of Agriculture is pretty phenomenal for our region. But it also fits the description of a boom time. Boom times are great, but history suggests they have a significant downside: They don’t last.
Look at the average from 1978 to 2008, and the net income for those years was—almost nothing. Some years were profitable, some weren’t, but over 20 years, farmers’ net income was “essentially flat,” according to Ken Meter of the Crossroads Resource Center.
Look at the 80-year trend, and there are a couple of high spots: Good years during and right after World War II, and in 1973 and ’74 when the U.S. was trading grain for oil.
“Really those are the only two times when farmers made a whole lot of money. Both of those would be stronger nationally than they were in the Dakotafire region,” Meter said. “(Local farmers) certainly don’t remember as good a year (as 2012) since 1974, and that’s true. But the good years we’ve had are unusual things. They didn’t last that long.”
And indeed, the high prices that gave local farmers such a good return in 2012 are already down significantly from those highs (for example, from $7-a-bushel corn in 2012 to about $4.40 in mid-June 2014).
“You have this situation where farmers are making money in a sense, but they are also shipping a lot of money away from the region in the course of doing well, and when corn prices winnow down, as they will, then that (profit) margin will also disappear,” Meter said.
Fewer farmers, less benefit for communities
And even when good money is coming in, there’s another statistic to consider: The number of farms in the region. Some counties in the region have done better than others—some have lost quite a few farms, while others have gained some. This statistic is a little hard to interpret, as it may be that some very small enterprises now qualify to be called farms (farms have to have $1,000 in income) when they didn’t in the last ag census. But Meter says the average is probably close to accurate: The region has 18 fewer farms than it did in 2007.
There’s a small comfort in the fact that the number did not drop significantly. But that number is still about half the number of farms that existed in 1945. Far fewer people are involved in agriculture than there used to be, which means that the benefits that come with good crop prices are not spread to as many people in the community as they did in years past. Your neighbor the farmer may have had a great year, for example, but you as a local grocery store owner probably didn’t notice much difference—or at least, not enough of a difference to counteract the fact that you have fewer customers overall, in part due to farm consolidations.
And it’s probably fair to say that the consolidating is not done. High land prices (driven by high crop prices) mean that for the most part, only those who already own land can afford to buy land. The typical farmland purchaser at an auction is a farmer getting bigger.
The need for better food
Just as farmers spend a significant part of their dollars on inputs from outside of the area, consumers also spend a big part of their food dollars on food from outside the area.
Consumers in the Dakotafire region spend $247 million on food, and $225 million of that goes out of the region. “Only $665,000 of food products (0.04 percent of farm cash receipts, and 0.27 percent of the region’s consumer market) are sold by farmers directly to consumers,” according to the Crossroads Research Center’s report.
Now, this data on local buying is not the most reliable and almost certainly underestimates some local food purchases. Meter said that it’s taken from a sampling of producers, and if that sample didn’t happen to hit the right producers, the final figure will be off. Moreover, some larger farmers say they just don’t keep track of their direct sales, as they are a relatively small part of what they do.
Meter also said that this data doesn’t take into account the value of what a farm family keeps for its own use. In the 1950s, that value nationally was about $20 billion, and today, it’s officially near zero. That’s not to say that people stopped growing their own food altogether—but they stopped reporting the value of what they did grow to the government.
So take this statistic with a grain of salt.
Whatever the actual percentage, compared to similar national data, the Dakotafire region purchases significantly fewer products from local producers than consumers in other parts of the country. Nationwide, a paltry 0.3 percent of food is sold direct to the consumer, while in the Dakotafire region, that total is a downright minuscule 0.04 percent.
For most of us, the food we do buy doesn’t include the recommended five or more servings of fruits or vegetables a day. Just 23 percent of North Dakota residents and 16 percent of South Dakotans say they eat that amount.
“This is a key indicator of health, since proper fruit and vegetable consumption has been linked to better health outcomes,” according to the CRC report.
What we are spending on is health-related issues. Sixty-five percent of North and South Dakota residents are either overweight or obese; in the two states, medical costs for treating obesity, diabetes and related conditions is about $710 million per year, according to the American Diabetes Association.
“A farm region is basically eating bad food that’s imported while it ships very productive grain somewhere else,” Meter said. “That’s a real dilemma that all farm areas in the country face.”
In the Dakotafire region, more than a quarter of households are at poverty level, getting free or reduced-price lunch at school. There is also a lot of need for food stamps in the middle of farm country.
“If farmers were growing food for neighbors, they would make sure that more of their neighbors had better food to eat — better food for schools, or a place where everyone could get fresh produce from local farmers,” Meter said.
The money we send elsewhere
Take the money that consumers spend on food from elsewhere, and the amount that farmers spend on inputs from elsewhere, and the result is a substantial loss for the region as a whole.
Yes, farmers made an average of $186 million in the years from 1989-2012. They also received an average of $183 million in subsidies over those years. But they spent $900 million on inputs sourced from outside of the region—which means the net loss to the region is $531 million.
Add in the $225 million that consumers spend on food purchases from elsewhere, and that’s $756 million in potential wealth that we send out of the region each year.
Creating a new local economy
How can we keep more of that money in our communities, where it can recirculate and do some good?
Both the ways that farmers shop and the ways that consumers shop contribute to the loss of potential wealth. In the Dakotafire region, it probably makes more sense to address the question of how farmers shop first, according to Meter.
“$900 million in inputs sourced outside the region every year,” Meter said. “What could you do to grow as a region to grow new fertility—bringing animals back to the land, doing more crop rotation, planting in ways that could be sustained with inputs you can actually generate from the region?”
Meter gave an example of a farmer who is turning cattle manure into commercial-scale compost. That’s one way to create an input in the region.
Unfortunately, right now there’s no financial incentive for farmers to take such steps—”especially when corn prices are high,” Meter said. “The system is there. They can buy inputs at local shops, can use the seeds and technology available to them to plant bumper crops. The competitive pressure is all about doing that.”
Competitive pressure doesn’t consider what’s best for communities, however.
“If you really wanted to look seriously at strengthening the local economy you might look at ways to bring those inputs more into local production,” Meter said.
Just because there’s more opportunity in addressing farmers’ purchasing first doesn’t mean that there’s no role for consumers in building a strong local economy, or for producers in growing or raising food for their local communities. But those efforts are still far behind other regions in the country.
What the region needs to do at this point is start small, Meter said. In some farm families, for example, a local food endeavor has allowed a spouse or son or daughter to make additional income.
In one ranch family in North Dakota with three sons, the father told each son that he was welcome to come back to the family operation after he finished his education, but he had to bring some sort of enterprise with him. Now, in addition to the cattle business, the family welcomes hunters in the fall and does ag tourism at other times of year.
The Jones family in Britton, S.D., established a community-supported agriculture business at first as a summer job for their children. It grew into a service for the community—a way for local people to get fresh fruits and vegetables.
“(Those) are the future for local foods right now,” Meter said. “Those very small initiatives are critical for establishing a food system that feeds itself.”
Farmers markets also play a key role in getting a local food economy established.
One example of this is in Kulm, N.D., where Sarah and Jordan Gackle founded Coteau Hills Farmers’ Market in 2011.
“When we moved here in 2009, it seemed so ironic to me that I was surrounded by agriculture and couldn’t get a fresh tomato in the grocery store,” Sarah Gackle said. “But that’s the traditional food system—rural areas don’t have the purchasing options available in urban areas.”
So the Gackles decided to start the Kulm farmers market in order to offer their community the freshest possible produce. The response has been more than they imagined, and, according to Gackle, bringing people together is what makes all the work worth it.
“I love having neighbors and friends hanging around and chatting outside during our few months of beautiful weather. It’s a lot of work, but a lot of fun too,” she said.
After a network of small producers is established, the region can start to think about other ways of local food promotion, like providing food for schools or hospitals, or creating a food hub.
One interesting aspect of the data in the report by Crossroads Resource Center is that no new dollars are required. The dollars are already being spent, by both farmers and consumers.
The possibility lies in redirecting those dollars toward purchases that are more beneficial—for the farmers that grow the food, for the consumers that eat more healthy food, and for the communities that benefit with more connections and handshakes.
- “What can I do?”
You can also request printed copies; call 605.697.5204 for a South Dakota directory or 701-328-2659 for a North Dakota directory.
If you already purchase local foods or grow some of your own, maybe you’re ready to try the Dakota Local Food Challenge! See how lo(cal) you can go, and get a fun T-shirt for participating.