Help us expand a wheat farm in Montana
July 3, 2006 8:45 AM   Subscribe

Is farming capable of being profitable within a generation?

My grandmother has wheat fields (320 acres) in Montana that she inherited from her father. Around her fields, land is going from between 300-800 an acre. My aunts/uncle/mother stand to inherit the land, and are potentially interested in expanding.

Currently she is producing something between 30 and 40Bu per acre, and they're farming half of the land each year, planting winter wheat, and fertilizing.

Can anyone point me to any links that may help advise us on starting a real (large scale) farming operation? Shes really only making around 9k on her land each year, after expenses. Is this below average, for Montana? Will operations be more cost effective/efficient if there is more land to farm?
posted by mhuckaba to Work & Money (18 answers total)
As I understand it, and I am by no means an expert, most farms don't do terribly well. They might make a profit, but rarely do they make a well-paying career.

Those that do well tend to be those to are more adaptable, experimentive, and diversified. Her farm could be the only local Amaranth producer, or have a cattle herd, or even run a halloween maze in the crops. The important thing is to branch out and work with the unexpected.

In other words, exactly what other profitable business must do.
posted by Kickstart70 at 9:25 AM on July 3, 2006

Montana is a big state, and agricultural opportunities will depend to some degree on where your grandmother's farm is located, and what water is readily available. Much of Montana where winter wheat is the predominant crop doesn't get enough average annual rain to make planting anything else worth the risk.

In agriculture, risk management is key, because a farmer is at risk from weather, pests, and markets. Many risks, he can do nothing about, except try to spread his exposure via insurance, or through time, by capitalizing and managing debt such that he can survive if his farming efforts are only truly profitable in 3 out of 5 years, on average.

But often, even the best strategies aren't enough. Drought cycles on the Great Plains some times extend years. Markets are constantly becoming more efficient at making farmers compete globally, whereas they can only act globally. And finally, in America, the continued expansion of corporate agriculture makes small scale farming comparatively more expensive, since the mega-operators amass economies of scale and lower costs of capital than small family farms can garner.

Farming on the scale you describe, on the high plains of Montana, is more a labor of love and a dedication to the life and land, than an profit opportunity.
posted by paulsc at 9:52 AM on July 3, 2006

You really will have to do an economic analysis to determine what crop is going to be the most cost-effective for your land. Also find out where the markets are and what sells best there. If everything in the area is geared towards wheat you may have a hard time selling anything else. For the most part, the small farmer really has to diversify and try not to compete with the larger industrial farms. The best option is going to start taking some college classes in farm management or economics. That will give you the knowledge to make the best use of what you have. The college I went to at UW-Platteville had a great Agribusiness program, find one in your area.
posted by JJ86 at 10:41 AM on July 3, 2006

correction: "... only act globally locally."
posted by paulsc at 10:48 AM on July 3, 2006

I was born and raised in wheat-farming Montana (north-central).

I've never seen a wealthy wheat farmer. Dirt poor most of the time. Wheat farming on the scale you're talking about will be back-breaking, never-ending work that results in just breaking even if you're lucky. The only farmers that I've seen making it are the ones who are lucky enough to have land close to easy sources of irrigation.

People have suggested diversifying, but the thing to remember about Montana, is, there are NO PEOPLE. If you have a corn maze, there will be no one to come. No farmer's markets, no tourists.

Don't underestimate how remote and lonely and harsh the plains of Montana are.

If you want to make a profit, try cattle ranching.
posted by patrickje at 10:57 AM on July 3, 2006

320 acres is not a lot of land for a high plains farming operation. That's a half section with a quarter fallow, a quarter in production each season. My dad used to farm in southwest North Dakota, and had trouble making a farm several times larger work reliably.

Simply put, no, it's not worth it. Your family will get better return for time and labor by leasing the land out to a responsible neighbor.

And patrickje: you can't have a corn maze in north-central Montana because your corn will probably only get waist-high most years.
posted by nathan_teske at 12:11 PM on July 3, 2006

The market for organic or artisanal products is growing. It's worth checking out to see if it's an option
posted by theora55 at 12:22 PM on July 3, 2006

I know beans about agriculture. But it seems that you're talking about an asset worth $100--250K earning a return of $9K/year, with shitloads of risk. Seems to me that the sensible thing to do is sell the land and invest the proceeeds in something with a higher expected rate of return (a plain old mutual fund?) or something with a similar rate of return and less risk (US bonds?) or a convex combination of the two.
posted by ROU_Xenophobe at 12:35 PM on July 3, 2006

nathon_teske: You're right, it's rare, I've seen corn fields in Montana, but they're nearly impossible to grow. The ones I remember were in Havre, MT, right down near the Milk River. They were very close to the river, in a flood plain.

Of course being that close to water is a rarity in the Montana, which explains there being next to no corn.
posted by patrickje at 12:38 PM on July 3, 2006

Read The Omnivore's Dilemma for some opinions to the effect that monoculture, pesticides and government subsidies are a suckerpunch for farmers. Also, from that book, find the works of Joel Salatin who has good practical advice on running a farm and letting the animals, the seasons, etc. do the work. A large scale industrial operation will just screw you. But a large scale Salatin-ish operation might be nice. I don't know anything about Montana.
posted by xueexueg at 1:04 PM on July 3, 2006

The market for organic or artisanal products is growing. It's worth checking out to see if it's an option

Seconded. I know someone that checked out of the rat race and started, of all things, a lavender farm. Hey, someone has to grow the smelly stuff, right?

I'd be wondering what else besides wheat grows well in this area, and is that lucrative?
posted by frogan at 1:20 PM on July 3, 2006

The only other thing I know was growing (in scale) in Montana when I left was soy beans.
posted by patrickje at 1:21 PM on July 3, 2006

The first act of this episode of This American Life included talk about the financial realities of financial farms these days. From what I remember if it that $9,000 figure is pretty spot-on average.
posted by phearlez at 2:04 PM on July 3, 2006

crap, the financial realities of FAMILY farms these days.
posted by phearlez at 2:05 PM on July 3, 2006

"Get big or get out" is the way of modern farming. Your farm is too small to turn a buck.
posted by wilful at 5:09 PM on July 3, 2006

I grew up on a farm, and though I don't know a lot about actually farming, here are a few generalities.

It's cheap to live on a farm. A lot of your basic expenses are lumped in with the farm's operating expenses i.e., the house, the insurance for your house and vehicles, the fuel for the vehicles, the ultilities, the property taxes. You get a lot of tax write offs. And you raise a lot of your own food. A 9K net is not enough, but if you netted say, $50K or $60K, you would actually be doing much better financially than a city dwelling family making the same amount.

My dad (who grew up on a farm and spent over 20 years farming as an adult, and still helps my brother out with his work occasionally) claims if you've got a good business mind, you can make a lot of money farming. He never did, but my oldest brother does quite well for himself. My brother has a 220 acre farm and specializes in pigs. He usually grosses a million a year (although a few years ago the bottom fell out of the pig market, and, er...).

It's like any other business. Do your research, make sure you understand the larger market forces, network with others in the same field (or, um, the fields around yours)... and then you'll know if you can or can't make farming work for you.
posted by orange swan at 6:21 PM on July 3, 2006

Response by poster: Her farm is actually about 40 miles from Havre and the closest town is around 500 people...
posted by mhuckaba at 12:56 AM on July 6, 2006

30 to 40 bu/acre seems really on the low end of what's viable for such an operation. Havre being about as far north as you can go, and that being a pretty dry area for annual rainfall, I'm wondering if water is the limit for yield. Fertilization technique can also determine how much of the applied nitrogen is actually biologically available to the plants.

I'd get in touch with the county extension service, and have some consultation about yield. Anything you can do via cultivation to raise yield will help to defray fixed costs of planting and harvesting, increasing profitability. But if water is your main problem, and you don't have adequate surface water or reasonable well sources on the property, low yields may be all you can get. Pumping water up from wells for irrigation can be an expensive business, and building a long term business that depends on such a fragile resource may not be reasonable. On the other hand, because water is such a critical need for hard wheat during the grain filling stage, pumping may make sense for some years in your operation.
posted by paulsc at 11:55 PM on July 7, 2006

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