Rise of the megafarm: North Dakota leads the way as American farms swell
MOORETON, N.D. - You can’t just fix tractors anymore.
Today’s tractors, though, are packed with electronic equipment. Specialists need to hook them up to computers to diagnose problems. And they’re huge – five to six times larger than the ones in Ward’s collection.
Like tractors, American farms are getting bigger – and North Dakota is leading the way.
Thinning margins and expensive machinery have forced more and more farmers to go big or get out. In North Dakota, the relatively small population and open landscape have accelerated the process.
About 35 percent of all North Dakota farms were 1,000 acres or larger in 2012, according to the Census of Agriculture recently released by the National Agricultural Statistics Service.
The share of farms that large in the state actually peaked in the 1990s, and has fallen from about 46 percent in 1992. But North Dakota is still well above the average for the country, where about 8 percent of farms were 1,000 or more acres in 2012.
A number of factors have caused the large size of North Dakota farms, and farmers and industry experts don’t always agree on what it ultimately means. But many say it’s unlikely the trend will reverse.
Explaining the increase
Ward, 75, started Mooreton Chemical 40 years ago and has since passed the business to his son Allen.
In addition to farming, Allen Ward sells seeds and chemicals on the roughly 2,500-acre operation.
Allen Ward said he’s lucky he got into farming when he did. Now, he said, it takes help to make it.
“You need to have somebody that’s willing to cut you a break,” he said. “You couldn’t just wake up one day and say, ‘I want to be a farmer.’ ”
North Dakota has essentially seen a more aggressive version of a national trend toward bigger farms. The barriers to entering the industry keep climbing, and maintaining an operation is becoming increasingly expensive.
Modern farm machinery is many times more efficient than the simple equipment of earlier generations, and it’s much more costly as a result. These days, a mammoth combine harvester can run a farmer $500,000.
But that kind of gear is necessary to compete with large farms’ productivity.
The technological arms race feeds into a cycle: To turn a profit, a farmer needs pricey equipment. To justify the equipment’s cost, the farmer needs more land.
“To farm all these acres, you got to have huge machineries,” said Alan Woodbury, who owns a grain elevator in Dickinson. “The small farmers just can’t do it.”
The cycle works both ways. New technology, like guided steering, has made it easier than ever to farm large tracts of land, said Mariah Ehmke, an associate professor in the University of Wyoming’s Department of Agricultural and Applied Economics.
“It’s just sort of a different world in terms of technology,” she said.
At Mooreton Chemical, a combine’s wheels are 6 feet tall. The machine comes tricked out with electronic displays, the capability for automatic steering and a CD deck.
The average North Dakota farm had about $300,000 worth of machinery and equipment in 2012, according to the census. That’s almost three times the national average.
But technology doesn’t completely explain why North Dakota is such a hotbed for big farms.
Experts say the abundance of sparsely populated land here is another part of the equation.
Years of migration to cities have left fewer people to farm, said Juan Murguia, an assistant professor in the Department of Agribusiness and Applied Economics at North Dakota State University. The remaining farmers have picked up more land as a result.
North Dakota is also drier than some other states, which hurts farmers’ yields.
“So you need more acres to survive as a farmer,” Murguia said.
And farmers here focus heavily on wheat – almost 8 million acres of it in 2012, about a third of all cropland harvested.
While it brought in about $2.5 billion for farms across the state in 2012, wheat hasn’t seen the technologically aided jumps in crop yields like corn and soybeans have, making it more likely and logical for farmers to go big to maximize their profit margins.
Some of those factors, like wide open land and small populations, have also caused a growth in farm size in Montana, South Dakota and Wyoming, the states with the next three highest proportions of farms 1,000 acres or larger.
What it means
For Mooreton Chemical, getting bigger has had some downsides. The price of inputs like seeds has risen steeply, and the company now needs to hire trained workers to operate its complicated machinery.
There’s some debate over how the rise of big farming has affected the industry.
Ehmke said bigger farms can lead to a lack of oversight, which in turn could cause food safety issues.
“When you’re a small farm, everyone’s in it together. They’re going to shed their blood, sweat and tears a lot harder,” she said. A bigger farm, with more layers of management, may not instill the same care for the product.
But food safety concerns will likely force a company out of business, so it’s not a long-term issue, said Bret Oelke, a retired Extension educator for the University of Minnesota.
And since large farms are generally more efficient, they can produce more at a lower cost. That means lower prices for consumers, Oelke said.
But the equation isn’t always that simple. Bill Craig, an Extension educator of agricultural business management at the University of Minnesota, pointed out that other factors such as droughts can drive food costs up.
And there’s a gap between farms and retailers, Ehmke said – more efficiency at one end doesn’t always translate to lower prices at the other. Prices tend to creep up anyway, she said.
“Once prices go up, you don’t see prices go down so much,” she said.
Larger farms are also at a bigger risk for severe weather, simply because their holdings cover more land, said Bob Kuylen, who farms west of South Heart.
“I think the more and more bigger you get, the less quality you’re going to have,” Kuylen said.
What is big?
The Ward farm covers roughly 2,500 acres. Put another way, that’s about 108 million square feet of land.
But Allen Ward said he doesn’t consider it a large operation, even though it fits into the census’ highest size bracket.
What makes a “big” farm is largely a matter of perception.
Ward said he’d consider any operation with 3,000 acres or more a large farm. Kuylen, who farms less land than the Wards, said “big” is in the 6,000- to 10,000-acre range.
Released every five years by a branch of the U.S. Department of Agriculture, the agricultural census’s largest category for farm land is 2,000 acres or more.
Oelke said the census hasn’t kept up with the ballooning size and cost of farming.
“They haven’t changed the questions in my lifetime,” he said.
The government’s statistics are inaccurate, said Woodbury, the grain elevator owner. He owns 60 acres that he says he “just messes around with.”
“I’m counted as a farm,” he said. “And I’m not a farm.”
The average North Dakota farm was about 1,250 acres in 2012, according to the census. That’s up more than 25 percent since the mid-1970s and almost three times higher than the national average.
But these days, Oelke said, 1,000 acres “isn’t even a full-time job.”
Still a family business
Allen Ward certainly keeps busy on his 2,500-acre operation.
He’s been helping his dad for decades, and now, at 52, he leads Mooreton Chemical.
That sort of transition from father to son is common in the industry, and it doesn’t look like the swelling size of farms will change anything.
“It is still a family business,” said Craig, from the University of Minnesota.
Kuylen said it’s almost impossible to get into farming these days without knowing someone because the barriers to entry are so high.
Allen Ward said it doesn’t look like his kids will follow him into the business. But he’s OK with that, he said, because farming – full of long hours and stress – is only meant for those who really want it.
While past crashes in commodity prices have made farming unattractive, Craig said more young people are entering the business.
The statistics haven’t quite caught up with that trend – the average North Dakota farm operator was 57, according to the most recent census.
Still, Kuylen didn’t seem concerned.
“I’m seeing more and more young guys in the elevator line, he said. “It’s a good sign.”