Against the grain
- April 27, 2009
Growing up on his family farm in Surry County, Steve Berryman helped his father grow soybeans and other crops. He learned firsthand the struggles of earning a living in a business heavily dependent on the unpredictable whims of Mother Nature and commodities markets. That knowledge didn’t stop him from becoming the sixth generation of his family to go into farming.
After graduating from Virginia Tech in 1999, however, Berryman decided to put a new twist on the family business. He purchased 40 acres in Surry and launched a “pick your own” operation in 2001. “I just wanted to try to diversify, to do something a little bit different,” he recalls.
College Run Farms gives Berryman more control over many of the challenges faced by farmers. For instance, he avoids wholesale distribution channels by promoting his products on a Web site and selling directly to the public. His customers, who are largely from the Williamsburg area, are willing to pay a premium for fresh strawberries, blueberries, pumpkins, sweet corn and other fresh fruits and vegetables.
Last year, even as the economy slowed and consumers cut back on spending, College Run Farms thrived. Berryman and his wife, Jordan, continued to diversify their offerings, selling homemade ice cream and jams and providing school groups with a farm experience that included a hayride and a corn maze. The business grossed $140,000 last year, double what it brought in just five years earlier.
Berryman, 31, is quick to point out that he’s not getting rich — “if we were getting rich, everybody would be doing this” — but his willingness to innovate and adapt likely will carry him through a deep recession that has toppled some of the biggest companies in Virginia.
Berryman’s entrepreneurial traits have enabled Virginia farmers — large and small — to survive in an industry that’s constantly under siege by bad weather, government regulations, international competition or unforeseen market forces.
Recently, farmers in almost every agricultural sector have been grappling with extreme volatility in commodity prices and the continuing high cost of “inputs,” supplies like seed, fertilizer, chemicals, feed, diesel fuel and equipment.
Nonetheless, by diversifying, cutting costs, investing carefully in technology and seeking new markets, most Virginia farmers will stay afloat this year and many will even show a healthy bottom line, says Todd Haymore, commissioner of the Virginia Department of Agriculture and Consumer Services (VDACS). “Farmers are probably weathering this current economic storm better than some other folks,” he says. “A lot of people have an image of the farmer as this guy wearing his overalls and sitting back on his porch watching the corn grow, when, in fact, these are savvy businessmen and businesswomen who are used to solving problems on a day-to-day basis and who are more than prepared when times get tough.”
A world of new challenges
Agriculture is Virginia’s No. 1 industry, a position it has held since the settling of Jamestown. In 2006 (the latest year figures are available), agriculture had an economic impact of $55 billion and 357,000 jobs, according to a study by the University of Virginia’s Weldon Cooper Center for Public Service. That’s compared with $36 billion and 380,000 jobs in 1998.
Those numbers, says Donna Pugh Johnson, president of the Virginia Agribusiness Council, show that farmers in 21st-century Virginia have become more productive and more efficient. “Farmers have to produce more to make the same amount,” she says. “We’re no longer just competing with farmers in Iowa; we’re competing with farmers on other continents.”
Global competition means not only new challenges but also new opportunities. The commonwealth’s agricultural exports, for example, grew from $1.75 billion in 2007 to $2.2 billion in 2008, according to a recent state report.
At the same time, though, farmers must cope with volatile swings of commodities markets. At one moment, prices may rise because demand is high and the supply of goods is low. The next moment could see prices collapse because supply has surged but demand has evaporated.
Take soybeans, for instance. Prices dropped from $15 a bushel in 2008 to about $8 a bushel in early 2009. Milk prices likewise are down 50 percent. At the same time, the cost of inputs remains inflated. The price of liquid nitrogen fertilizer — which just a few years back cost $90 to $100 a ton — spiked to $450 a ton in 2008 and has dropped back only to about $300 a ton so far this year. “It’s been a roller-coaster ride over the past year,” says Steve Sturgis who farms 800 acres of row crops including soybeans and wheat near Eastville on the Eastern Shore. “It’s just another straw on the camel’s back that means you have to be a lot tighter now and a lot sharper, looking for any edge that will help you cut costs.”
Robert Spiers says he has never seen this much gap between commodity prices and input expenses. He is a sixth-generation farmer with more than 1,100 acres of soybeans, corn, wheat and tobacco in Dinwiddie and Sussex counties. “It’s just so out of whack,” he says. Even before he put his first seed in the ground this spring, Spiers was predicting a bad year. “It’s very difficult to budget in this environment and still show a profit.”
Still, Spiers is willing to innovate to make the best of a tough situation. He is investing in a nitrogen-injection machine, which will enable him to insert liquid nitrogen in the ground next to the root of his corn stalks. That procedure should ensure that none of the nitrogen is wasted as a result of rain runoff.
Selling at farmers’ markets
Other farmers are expanding into new markets. A growing number are selling fruits and vegetables at local farmers’ markets as consumers show a growing willingness to pay a bit more for organic and locally produced food. Still other farmers are inviting tourists to their farms.
For his part, Sturgis has turned to aquafarming, growing clams in leased water in the Chesapeake Bay under contract to a distributor. He also provides “custom farming,” an arrangement in which smaller farmers pay him a fixed price per acre to plant and harvest crops using his equipment.
Meanwhile, Sturgis may buy a larger sprayer and head for his combine “so I can cover more ground in the same amount of time.” In fact, farmers’ willingness to invest in technology is one reason they’re now able to do more with less, says Johnson, the president of the agribusiness council. Many farmers rely heavily on the Internet to network with other growers, stay on top of weather changes and comparison-shop for supplies and equipment.
Tractors and farm implements now come equipped with global positioning system (GPS) capabilities and variable-rate control systems that give farmers more precision in planting and spraying crops. Seeds also have advanced during the last two decades, with genetically modified varieties yielding more crops per acre while resisting certain pests and plant diseases.
These advances are beneficial, but they can be a double-edged sword when farmers become dependent on them. Berryman says that when the computer in his father’s GPS-enabled sprayer gave out, the replacement cost $4,000. Gerald Garber, who runs a dairy with 500 cows in Weyers Cave, will spend $70,000 this year just to upgrade a computer system in his milking parlor that identifies cows and records milk weights. “Technology can add a major capital cost to your business, so you’ve really got to take the time to do the analysis to know that you’re going to get that return,” says Sturgis. “Oftentimes, though, the price of some of these advanced technologies seems to always be just out of reach for the small guy. You can’t quite get the return you need to justify it.”
Keeping the cash flowing
Given the current environment, some farmers will struggle this year. Others will experience income shortfalls. Luckily, though, the credit freeze that has crippled other industries is not having much of an impact on farmers.
“We do have money, we have access to money and we are working with farmers to get them what they need,” says Larry Powell, commercial agriculture business line manager for Virginia Farm Credit. “Cash flow is the name of the game for farmers: short-term, intermediate-term and long-term. If farmers can’t get credit and it suddenly turns into a cash-on-delivery system, well, it would be all downhill from there. Luckily, that’s not the case.”
For many farmers, a down year in a tough economy could cause some to consider selling their land. Before the housing bust, Virginia was losing 23,000 acres of farmland a year to development. Despite the recession, prices for raw land remain relatively high.
Garber, who owns 2,000 acres, admits that occasionally the idea can be tempting because “you can net a nice price if you sell to a housing developer, but I would never cash in for cashing in’s sake,” he says. “I would only make the decision based on whether or not it made sense to remain a working farm.”
In fact, given a choice, most farmers want to remain in agriculture. However, Johnson notes, the decision to sell is frequently made out of necessity rather than financial distress or disillusion over the hardships of farming. The average age of Virginia farmers is 57. Many farmers end up selling because their heirs don’t have the desire to take over the family farm. For others, says Haymore, “the land is a kind of personal 401(k)” to be cashed in at the end of a successful farming career. (See related story on Virginia’s land conservation program, page 27.)
Many farmers do see green in their future, and they’re not talking about cash: They are excited about the possibility of being involved in producing alternative-energy sources. Some farmers already are providing soybeans, canola and even chicken fat for biodiesel producers such as Virginia Biodiesel in West Point and Red Birch Energy in Bassett.
Likewise Virginia dairy farmers are beginning to invest in methane digesters to produce energy for their operations and to sell to utilities such as Dominion Virginia Power and Appalachian Power. And other farmers are waiting for the opportunity to bolster their crop portfolio with algae, barley and switchgrass, which have been shown to have potential as green fuels. “Agriculture in Virginia has always been an evolution,” says Haymore, the VDACS commissioner. “Energy production is likely to be a big part of the next phase.”
That kind of optimism over the next harvest is what has long kept most farmers going, even when the drought won’t let up, the compliance paperwork seems burdensome and the dollars don’t add up.
Sturgis admits that sometimes he feels overwhelmed by the uncertainties and the financial pressures of farming. “It really can be a tough way to make a living.” But not so tough that he has tried to deter his two sons from continuing the family business. Kyle is a junior studying horticulture at Ferrum College, and Jarrett, a high-school senior, is heading off to to study agriculture at North Carolina State University this fall.
“It’s our way of life,” their father says. “Hopefully, being from the next generation, they’ll bring some fresh new ideas with them.”