The Vanishing Small Farmer

The New Republic, June 12, 1971

YGHISH BULBULIAN’S FACE is weathered, his pace somewhat slowed. But when he looks back at what he has left for his son Berge and his grandchildren, Yghish Bulbulian is a proud man.

Born in Armenia at the end of the last century, Bulbulian fled his homeland during World War I when more than a million Armenians were slaughtered by the Turks. He arrived, penniless, in California and settled near Fresno, where a large colony of Armenians had gathered. For several years he worked as a field hand in the San Joaquin and Imperial valleys, managing to save a few pennies each payday. By 1929 he was able to scrape together $500 for a down payment on 20 acres, part of a homestead that was up for sale. He, his wife and son worked ten hours a day, seven days a week in the fields, and when they weren’t working their own land they were hiring themselves out to others.

In 1943 Bulbulian added 30 acres to his farm, and every decade or so thereafter he added more. Today, he and his son grow grapes and currants on 150 acres; though he’s 78, he still helps plant, irrigate and box his crop. His income has not been high, but there were enough good years to permit some amenities. Father and son now live in comfortable, well-furnished houses, and drive late model cars.

It’s no rags-to-riches story, and Bulbulian is no Horatio Alger figure, but he is an example of the many immigrant farm hands who, through frugality and hard work, rose to become farm owners. Unfortunately, he represents a dying breed.

In the 1920s, when Bulbulian got to California, it was natural for field laborers to aspire to become small farmers. Today it is almost unthinkable. For the same 20 acres that Bulbulian bought 40 years ago for $500 down, an aspiring farmer now would need $12,000 down. Moreover, it would be pointless for him to buy only 20 acres; he’d need at least four times that to have a fighting chance. And while Bulbulian could make do, when starting, with two mules and a plow, his contemporary counterpart would require thousands of dollars worth of tractors, chemicals and other equipment. Little wonder that few persons without an inheritance or outside income are entering farming, or that the number of farmers of Bulbulian’s size is rapidly shrinking.

U.S. Department of Agriculture statistics tell the story: in 1950 there were 5.4 million farms in America: today the figure is around 2.9 million. As the number of farms declines, the average size of remaining farms increases: it’s now over 380 acres, compared to 215 acres twenty years ago. And as agriculture steadily becomes more mechanized, it comes to be dominated by those who have capital – the most successful family farmers, and the giant corporations. Thus, in 1969, the largest 40,000 farms, representing less than two percent of the total number, accounted for more than one-third of America’s farm sales.

THESE ARE THE broad statistics. Behind them are the economic forces, abetted by government policies, which say to the small farmer: either get bigger or get out. The pattern is typically like this: a farm of 80 or 160 acres has belonged to a family for generations. It is squeezed by rising local taxes, the high cost of farm equipment, and corporate competition. The old man dies or retires. What will the children do? To survive as farmers they must expand and mechanize. The other option is to sell, perhaps to a suburban developer, perhaps to another farmer who is expanding. The latter course is easier, and increasingly it is the one that is chosen.

The trend towards corporate farming greatly intensifies the pressures on the independent small farmer. This trend is strongest in the South and West, particularly in Florida, California, Texas, Arizona and Hawaii, where large land units have long been the rule. Big canners like Minute Maid, a subsidiary of Coca-Cola, and Libby-McNeill & Libby, own an estimated 20 percent of Florida’s citrus groves, compared with less than one percent in 1960. Corporate farms in California account for 90 percent of the melon crop, 46 percent of the cattle sold, 38 percent of the cotton produced and 30 percent of the citrus fruits. Two conglomerates, Purex and United Brands, now control one-third of the green leafy vegetable production in the United States, and the list of other blue chips lately plunging into agriculture, according to the Agribusiness Accountability Project, includes Tenneco, Gulf & Western, Penn Central, W.R. Grace, Del Monte, Getty Oil, Goodyear, Monsanto, Union Carbide, Kaiser Aluminum, Aetna Life, Boeing, Dow Chemical and American Cyanamid.

WHY ARE MAJOR corporations suddenly fascinated with farming, a business where profit margins are generally small? The motives are chiefly three: land speculation, tax dodging, and the development of integrated “total food systems.”

Suppose for example that a company invests $1 million a year of nonagricultural earnings in improving a large tract of farmland – by planting pear trees, say, or laying irrigation pipes. It pays no taxes on the $1 million, and can even deduct from its remaining taxes the cost of caring for the trees until they bear fruit, and the depreciable value of the irrigation pipes. Then suppose, as is usually the case, that each dollar thus invested creates a corresponding increase in the market value of the land. Suppose further that the company sells the land to another corporation at the end of ten years. Its profit on the land sale is then approximately equal to the earnings it has invested over the decade — in this case, $10 million. However, these earnings are now in the form of capital gains, and are taxed at 25 percent rather than 48 percent. Thus, the company has made a multi-million dollar profit at the taxpayers’ expense. Any income the farm may have produced during this period is frosting on the cake.

Many corporations have their eyes on farming for another reason: they see vast profits accruing to vertically integrated conglomerates that control every stage of the food production and distribution process from raw nitrogen to precooked soufflé on the dining table. They are aware of the fact — indeed, they are largely responsible for it — that profits in the food industry go increasingly to companies in the food business rather than to farmers: in 1969 only 33 cents out of every dollar spent on food went to farmers, down from 40 cents two decades ago.

No single company better exemplifies the corporate plunge into farming than Tenneco, formerly Tennessee Gas and Transmission. In addition to its oil, natural gas and shipbuilding interests, Tenneco controls over a million acres in California and Arizona, mostly as a result of its purchase in 1967 of Kern County Land Company. It also produces agricultural chemicals and owns J. I. Case, a manufacturer of farm machinery, Heggblade-Marguleas, a leading California farm management firm, and the Packaging Corporation of America.

Tenneco makes money out of its landholdings from all directions. First, of course, are the tax-privileged revenues from oil and gas that lie beneath the surface. Then there is land development, the ultimate stage in the speculative game. Tenneco has half a dozen major developments planned or underway in California. One is the Pine Mountain Club, community in Los Padres National Forest, about an hour’s drive from Los Angeles. Another 6,000-acre development on the outskirts of Bakersfield will include an industrial park, a shopping center, a golf course and a retirement community. One of the company’s cleverest gambits was to donate 370 acres near Bakersfield for a new state college. (Lands for UCLA and the University of California at Irvine were similarly donated by large landholders.) According to Simon Askin, executive vice-president of Tenneco, the college “enhances the value of an additional 6,500 acres of company land.”

It is Tenneco’s multi-faceted agribusiness operations, however, that cast the longest shadow over the small farmer’s future. Tenneco’s aim, says Askin, “is to accomplish integration from the seedling to the supermarket.” The company is already far advanced along that road. It grows, on magnificently irrigated former Kern County Land Company farmlands, an enormous diversity of crops, including corn, potatoes, barley, sugar beets, cotton, almonds, grapes, oranges, lemons, peaches, pears and plums. For capital inputs it has its own agricultural chemicals and farm machinery. For processing and packaging it has a huge new plant near Bakersfield, more than six times as large as a football field. It is currently testing a brand name identification program which, it hopes, will make the Tenneco Sun Giant label a household word in foods.

AGAINST THIS KIND of competition, what chance does the small farmer have? He survives or fails on his crop income alone. He does not have the benefit of outside earnings, or the luxury of converting current income into future capital gains. He might wish to expand or to buy more equipment, but to do so he must use his own money, not the Treasury’s. When local property taxes rise because of encroaching suburbia, the large corporation can absorb the increase as a hedge against future speculative profits. For the small farmer higher taxes simply mean a decrease in the income on which he must live. Nor can he recoup farming losses with profits from machinery, chemicals, processing, packaging or marketing. If he is not paid enough cash for his crop, he is wiped out, regardless of how profitable the other stages of food production might be.

Corporations have other advantages over small farmers, including access to credit. According to a Department of Agriculture study in 1966, corporate farmers are able to borrow nearly twice the proportion of their assets that family farmers are. Corporations also enjoy the government-sanctioned privilege of exploiting their employees to a degree unparalleled in any other industry. The federal minimum wage for farm workers is $1.30 an hour – 30 cents below the minimum paid to all other workers. And while it is a felony for ordinary individuals to harbor illegal aliens, it is not a crime for growers to employ them. Such laws as these not only abuse farm workers; they also hurt the self-employed farmer, who, in order to compete with the giant growers, winds up having to exploit himself.

Farming corporations receive further government aid in the form of subsidies. Among these are payments for reduced crop production. Since farmers with large landholdings are able to “not-grow” more crops than are farmers with small holdings, their subsidies are more generous. Charles Schultze, former director of the Budget Bureau, estimates the total cost of farm subsidies at $9 to $10 billion annually, the lion’s share of which goes not to poor farmers, who need it, but to the corporate giants. Last year, the I.G. Boswell Company of California received federal subsidies totaling $4.4 million; Tenneco got $1.5 million; the Florida-based U.S. Sugar Company collected $1.1 million; the Delta and Pine Land Company of Mississippi bagged $814,000. A newly enacted $55,000 ceiling will reduce some of the largest handouts this year, but the limitation has too many loopholes (for example, the ceiling is computed on a per crop and per nominal owner or lessor basis) to be effective.

SUBSIDIES ALSO COME in the form of water, delivered to many farmers’ doorsteps by federally-funded reclamation projects. The price paid by water users is well below the actual cost of delivering the water. Most of the cost of building dams and aqueducts is charged to the general Treasury and to hydroelectric power consumers.

In theory, federally subsidized water is legally barred from delivery to farms of more than 160 acres, and to all absentee-owned farms. In practice the law is widely violated, to the detriment of the family farmers it was intended to help. Thus, small farmers in California are now being hurt by the delivery of new water to lands owned by Tenneco, Getty Oil, the Tejón Ranch, Standard Oil of California and the Southern Pacific Railroad, among others. Production of fruits and vegetables from these heretofore arid lands will soon flood the market, thereby driving down prices. Much the same fate awaits small farmers in the Pacific Northwest, where vast lands controlled by Boeing, the Burlington Northern, Utah and Idaho Sugar, and Amfac of Hawaii are about to receive federally-dammed water from the Columbia river.

Welfare is another indirect subsidy to large growers, though they’re not inclined to admit it. It allows them to use laborers for a few months, then cast them aside, secure in the knowledge that they’ll survive until the following year’s work season, without having to be paid a living wage. On top of this are the millions spent by federal and state governments on agricultural research — a subsidy no other industry enjoys. While some of this research helps the small farmer, the bulk of it is aimed at breeding crops and designing machines for large-scale farming.

WHAT WILL BE the future of American agriculture? If present policies continue, the answer seems fairly obvious: the poor will be squeezed, the rich will be subsidized, and in the end only the biggest and best integrated operations will survive. The prospect pleases corporate moguls like Bank of America ex-president Rudolph Peterson, who has called for a program “to enable the small uneconomic farmer — the one who is unable or unwilling to bring his farm to the commercial level by expansion or merger — to take his land out of production with dignity.” It terrifies small farmers, many of whom are no less efficient than their giant competitors, but simply less favored by government policies.

One vision of what American agriculture may look like can be found in the February 1970 issue of National Geographic. Here are stunning photographs of an egg factory near Los Angeles where two million caged Leghorns gobble 250 tons of feed and lay one million eggs each day; a cattle metropolis in Colorado where 100,000 steers are fattened on formulas prescribed by computer; a $23,000 tomato harvesting machine, developed by the University of California, that snaps up specially bred tomatoes for farm workers to sort while taped music purrs in the background.

These photographs of contemporary marvels are accompanied by an artist’s depiction of an early 21^st t century farm (if that is the proper word) as foreseen by USDA specialists. All operations are monitored by one man from a bubble-top control tower. An enormous remote-control tiller rolls across a ten-mile-long wheat field on tracks that keep it from compacting the soil. Another gigantic machine automatically waters a ten-mile field of soybeans, while a jet-powered helicopter sprays insecticides. Alongside a monorail track stand a pair of skyscrapers for cattle. Behind them are several illuminated plastic domes containing controlled environments for growing strawberries, tomatoes and celery. A USDA expert outlines some other possibilities: hills will be leveled with nuclear energy in order to flatten extra-long fields; sensors buried in the soil will find out when crops need water, and automated irrigation systems will bring it to them; airplanes, computers and closed-circuit TV will be as commonplace as tractors today.

A SOMEWHAT DIFFERENT vision of the future — not endorsed by the USDA — can be found in a gently sloping field near Watsonville, California. It focuses on human beings rather than technology, on giving present-day Yghish Bulbulians a chance to advance themselves rather than be cast into ghettos and barrios. Here on the edge of the Pájaro valley is a bustling new enterprise called the Cooperativa Campesina, a farming cooperative formed slightly over a year ago by four Mexican-American families, now expanded to twenty-five and still growing.

The economics of the cooperative are relatively simple. There are 140 acres under lease, with 80 planted in strawberries and 60 in zucchini squash. (Eventually all will be planted in strawberries.) To avoid hassles, the land is divided among the members by lottery, with each family responsible for its own parcel. Strawberries were chosen as the principal crop because they provide a high return and are labor-intensive; there is no machine yet in sight that can pick them. Each acre of strawberries produces about 3,000 trays per year, and each tray sells for about $3. Thus, one acre earns about $9,000 a year. Expenses, not counting labor, come to about half that, so each family will earn about $12,000 the first year if all goes well, plus whatever additional income comes from the squash. The second year, when expenses are lower, they’ll earn more. With four or five family members working steadily in the field, the earnings don’t amount to much on an hourly basis – perhaps $1.20 per hour. But total family income will be two or three times what it was when they were hired laborers or sharecroppers. In addition they’ll have equity in the co-op, and the satisfaction of being their own boss.

It wasn’t easy to get the co-op started — the initial members had to scrape up $500 apiece, then look around for credit. The Farmers Home Administration, a federal lending agency, turned them down. Local banks, under pressure from a large local grower, were hesitant, but finally Wells Fargo came through with a $150,000 crop loan, to be repaid after the first strawberry harvest in 1972. An OEO-funded consulting firm, the Central Coast Counties Development Corporation, lent another $100,000, which will be repaid in three years. With $250,000 in hand, the co-op was able to purchase tractors, root stock and chemicals. Now it is in as good a position as the established growers, if not a better one: it’s the only commercial strawberry producer in California that doesn’t have to worry about labor troubles. By next year it will be marketing strawberries under its own Cooperativa Campesina label, and its members see no reason why within five or six years they can’t become a dominant factor within the $60 million strawberry industry.

If the co-op prospers, its members don’t plan to hoard the wealth. They intend to open up membership to as many poor families as the enterprise will support. “We have a saying in Spanish,” says Refugio Pinedo, one of the founders and now secretary of the co-op. “Agua que no te tomas, dejala correr.” Water that you cannot drink yourself, let it run for others.

Second in a series on land reform in the U.S.