A New Lease on Farmland:
Assuring a Future for Farming in the Northeast
by Susan Witt and Jay Rossier
Edited by Hildegarde Hannum
Originally published in 1990 by the E. F. Schumacher Society
Revised for second printing 2000
© 1990 and 2000 by E. F. Schumacher Society
140 Jug End Road, Great Barrington, MA 01230, 413-528-1737
www.schumachersociety.org
Farmland Preservation: A First Step
Here in the Northeast, the past several years have seen
a tremendous boost in public awareness of the importance
of farmland preservation. With public money in short supply,
many local communities like those in the southern Berkshires
have taken matters into their own hands by instituting nonprofit
conservation land trusts. As private, locally based organizations
these trusts have been been able to be flexible and act
quickly in order to purchase large amounts of farmland as
it comes to market, preserving it for future generations.
This is a major accomplishment.
As members of a land trust, you and your organization are
undoubtedly aware that in spite of this effort, farming
in the Northeast continues to decline. You have probably
seen that buying development rights or using other legal
means of preventing building on farmland in your area has
not necessarily guaranteed that it continues to be farmed.
Preserving farmland is an important first step toward encouraging
a solid regional agricultural base, but it is only a first
step.
As organizations actively working with ecologically conscious
farmers here in the Northeast we—the sponsors of this
document—are concerned about this decline. We have
considered the difficulties involved with preserving farming
and would like to share with you some ideas for ensuring
the full productive and responsible use of farmland that
you have helped, and are helping, to conserve.
The Changing Nature of Farming in the Northeast
To preserve farming is not necessarily to preserve farms
as they have existed over the past half-century in this
region. Changing demographics and new understanding of the
needs of people and the soil have created constraints and
opportunities that will determine the composition of our
farm population and our farmland into the next century.
What might a sustainable agricultural community look like
in the near future?
Resource Conservation
Clearly, agriculture in the Northeast will have to continue
to protect and enhance the soil, water, and human resources
that make food production possible. Farming methods that
gradually improve soil fertility and water-holding capacity
rather than cause water contamination or soil erosion require
large investments of time, material, and husbandry on the
part of a farmer.
Diversity
A farmer dependent on only one crop may be forced by financial
considerations to take drastic measures to save the crop
from pest infestation or adverse weather conditions, at
the expense of responsible stewardship of the land and natural
resources. Sound resource conservation, on the other hand,
requires crop diversity. Diversity allows for partial crop
failure and contributes to the integrity of sustainable
farming practices.
Diversity means smaller yields of multiple crops rather
than large yields of one crop. The milk truck cannot afford
to make its way down a long bumpy dirt road for only a few
hundred pounds of milk. The new Northeast farmer will have
to identify varied, smaller markets close to the farm.
Smaller-Scale Farms
In the more urban areas of the Northeast, populations
continue to grow. One of the results of this growth is that
in some areas more land will be needed for housing, manufacturing,
and recreation—with less available to the farmer. The
neighbor’s pasture where the heifers have always been
kept may be sold to the condominium developer.
The need for farmland-preservation efforts in these areas
will be acute. Even after the purchase of development rights
or other forms of restriction the cost of land purchase
may remain high, perhaps prohibitively so for a farmer requiring
large amounts of acreage.
New Markets
On the other hand, growing Northeast population centers
also promise new opportunities for direct marketing of crops,
which for many farmers is the critical edge that sustains
an agricultural enterprise. The smaller grower who uses
little or no dangerous chemicals can produce a high quality
product on few acres with minimum adverse impact on nonfarming
neighbors.
Already, a newly health-conscious public is demanding
more nutritious, higher-quality food. People want to know
that what they eat was grown without polluting the environment.
They want to know that it is fresh and that nonrenewable
fossil fuels have not been extracted and burned in order
to transport it over a large distance.
Perhaps most importantly, it is clear to the public that
buying food locally can have a direct effect on the quality
of the scenic quality of the area. They understand that
when they buy from a local farmer, they are helping to preserve
the rural character of the landscape and the neighborhood.
A Longer Vision
The requirements for producing food for these new markets
are the same as those for producing food in an ecologically
sensitive manner that conserves land and natural resources.
The new Northeast farmers will run smaller, more diverse,
more labor-intensive farms. They will pay careful attention
to the health of available soil and water resources.
This kind of farming requires longer-term planning than
is customary in other businesses, even in most farm business
planning. A five-year agreement is a significant commitment
in some kinds of enterprises, but to a steward intent on
bringing the land to full health, a process that might last
a lifetime or several lifetimes, five years is merely a
beginning.
The Changing Nature of Farmers in the Northeast
Their Background
Most of the young farmers in the Northeast today have
not inherited their farm from their parents. They probably
have not grown up in the town in which they farm. Many will
not have grown up on farms at all.
In fact, today’s ecologically conscious farmers are
often generations removed from the farm. They read the work
of Wendell Berry, are active members of the Northeast Organic
Farmers Association, or have had training in sustainable
agriculture techniques at such places as the Land Institute
or the New Alchemy Institute. They are thinking globally
and acting locally by producing food in the best way they
know how.
The new farmers are broadly educated and have nonfarming
career options. They have chosen farming, and they therefore
can and must be choosy when they embark on an agricultural
enterprise. They will commit themselves only if they feel
they can succeed both ecologically and economically.
Their Situation
Today’s new farmers are likely to be in their thirties
and ready to establish a home and a family. They need security
in order to build a livelihood and a life.
Part of their security will lie in their own skills and
expertise. In order to run a business they need the independence
to operate as they see fit, within a structure that secures
the land from damage by ill use. Often they have capital
and are looking to invest it in their future. As businesspersons
they expect a return on that investment.
If we in the Northeast are to preserve farmland for future
generations, we must address the needs of these farmers.
They have the skills, the knowledge, and the passion both
to farm well and to make a living at it. They are the people
who can maintain and improve the farmland you and your organization
preserve, but they need help.
A New Lease on Farmland: Responding To Change
Conservation land trusts in the Northeast have been eager
to attract environmentally concerned farmers for their farmland.
As organizations depending on volunteers they frequently
resort to a short-term lease with terms that are simple
to monitor. A lease might require only that the fields be
cut twice a year. The organization relies on one of its
members driving by to check for compliance.
Short-term leases, however, invite short-sighted farming
practices. Without the incentive to plan for future generations
a farmer, as a businessperson in a highly regulated market
environment, may have to force the highest and quickest
yield without adequate attention to the health of the soil.
If owners of farmland in the Northeast are to attract and
retain the ecologically committed farmer, they must be prepared
to offer farm leases that incorporate long-range concerns.
Partnership
The land, the farmer, and the community (represented by
a conservation land trust) all can be equal partners in
a carefully developed long-term lease of farmland. By taking
the time to prepare a thorough land-use plan for a farm
and clarifying such use in the written lease, the conservation
land trust can retain enough control to assure that the
land is improved instead of degraded or left fallow, and
the farmer can be given enough flexibility, independence,
and security to make crucial business decisions while farming
in a sustainable manner. There are several critical elements
to a farmland lease that will make it possible for a farmer
to farm responsibly.
Land-Use Planning
A land-use plan should designate the location of existing
farm and residential buildings and should include a careful
analysis of the soils and terrain and possible water sources
on a piece of farmland. A good plan will divide the land
into different sections based on these natural conditions,
and will specify upper and lower limits to the intensity
with which the lease allows each of these sections to be
farmed.
Most intensive use might be an organic market garden,
while least intensive might require that a field be mowed
at least once a year. Permitted tillage methods might also
be delineated in a land-use plan.
The plan should also specify where residential and farm
buildings should be located. The placement of buildings
must serve the residential and farm needs of the farmer
in a way that minimizes their adverse impact on the agricultural
land and on neighbors as well. Buffer zones designed to
minimize the impact of all farm activity on neighbors should
also be designated in the plan.
A land-use plan is not a farm plan, which is the concern
of the farmer and the investors in the farm enterprise;
rather, it is a statement by the farmland owner of the conditions
under which the land may be used. If a conservation land
trust has identified a particular farmer as the future lessee
of farmland, it is important for that farmer’s input
to be included in the land-use plan. But the prime responsibility
for developing the plan rests with the lessor. A farmer
considering a lease can then quickly evaluate whether or
not the land’s potential, as defined by the land’s
owner, will address the farmer’s interest.
Once committed, the farmer is free to change a business
plan as local markets change, without renegotiating with
the land owner. The land use plan provides the framework
for protecting the natural resources of the land, but the
farmer is independent within that framework.
Security
A long-term lease gives the farmer the long-term security
usually associated with ownership of land. Improvements
in soil fertility and productivity occur very slowly, and
farmers need to know they will be able to reap the benefits
of improvements that may take them ten or more years to
realize.
For many kinds of enterprises, a farmer needs the security
of a lifetime lease. Community land trusts use ninety-nine-year
leases, with rights of transfer and renewal. This leaves
no ambiguity as to the landowner’s intent and also
provides security for the investor in the farm enterprise.
For example, a bank would be unlikely to consider a fifteen-year
investment in farm equipment if a lease of the land ended
after ten years.
Ownership of Improvements
Of course, unforeseen circumstances do occur, and farmers
need to know that should they have to give up their lease,
they can retain the value of the improvements they have
made in the farm. A barn and an orchard represent investments
that a farmer must be able to capitalize at resale. A properly
written lease can allow farmers to sell those assets that
are a result of the skill and hard work they have applied
to the land.
Only with ownership of the improvements can farmers afford
to invest themselves and their capital in a piece of land.
Without these investments, farmland will not be preserved
as farmland.
Continued Affordability
While it is of the greatest importance that farmers be
able to sell the improvements they have made in and on the
land, it is equally important not to sell them at a speculative
price that prohibits another farmer from buying them. The
land can remain productive only if the improvements remain
affordable.
A thoughtfully written lease can limit the price of improvements
at resale. A nonprofit organization can accomplish this
by holding a first option to repurchase buildings and improvements
at a formula price. One formula, for instance, requires
the buildings and improvements to be assessed independently
of the land at current replacement cost at the time of sale.
Assessors can be local farmers, extension agents, real estate
agents, contractors, Soil Conservation Service scientists,
or other suitable experts.
The average of three assessments would determine the cost
for the nonprofit organization to purchase the improvements.
The new farmer can then repurchase the improvements from
the nonprofit for the same nonspeculative price, which keeps
costs affordable.
Low Land Cost
High land prices in the Northeast make starting a profitable
farm difficult. The income from a small-scale, intensive
operation, even when complete with nearby markets, cannot
carry the debt incurred by land purchase. A lease at a low
monthly cost will allow farmers to invest their capital
in equipment and supplies rather than in land payments,
thus making the farm more productive.
Initially the monthly lease fee should at least cover local
taxes on the land and buildings, insurance on the land,
any town recycling fees, and fire department assessments
as well as the cost of establishing and managing the lease.
Eventually the lease fee should include a fair rent for
the land itself. One way to determine this is to calculate
the value of the land as farmland and determine comparable
rentals for farmland in the region. The ground rent for
that portion of land with existing or potential buildings
should similarly be determined using comprable building
site values in the region.
The nonprofit expenses for overseeing the lease are paid
from the management fees, but the ground rent for the land
itself is placed in a separate fund for the purchase of
new farmland. This policy ensures that the farmers helped
by the initial community effort, contribute to helping future
farmers gain access to the land. The process stays dynamic.
In Summary
By offering long-term, low-cost leases under which ownership
of improvements rests with the lessees, conservation land
trusts can help ensure that the farmland they preserve remains
actively farmed by local resident farmers.
Organizational Implications For Land Trusts
Long-term leases will require a long-term commitment to
their management. This may present a challenge to conservation
land trusts which have traditionally been volunteer organizations.
In addition providing equity to individual leaseholders
may jeopradize the charitable status of your organization
as a purely conservation-oriented group. Your conservation
land trust may need to establish a separate management group
or corporation to hold in trust that land on which equity
leases have been granted and to oversee compliance with
the terms of the leases. Or you may want to work closely
with another nonprofit organization in the area with similar
goals.
Community Land Trusts and Lease Management
Community land trusts can be an important resource for
conservation land trusts because the former are experienced
in management of long-term leases that provide for ownership
of improvements. In order to make these improvements (primarily
housing) affordable to the next buyer, community land trusts
hold first option to repurchase them at a nonspeculative
price. Community land trusts are nonprofit organizations
with membership open to anyone within a given region. As
such they serve local areas that often overlap those of
conservation land trusts. They work with land-use planners,
lawyers, and investors in preparing lease agreements. They
also work with leaseholders to encourage as much self-management
as is appropriate in order to lower costs for and maintain
the independence of those leaseholds.
A conservation land trust might also consider forming
its own community land trust as a separate but related management
organization should the number of productive farm leases
represent a significant part of the income and activity
of the conservation land trust. Those portions of the land
donated to the conservation land trust that are productive
farmland could be turned over directly to the community
land trust for management. Any lease income from the land
over and above expenses would be returned to the conservation
land trust to establish a fund for purchase of additional
land.
The Community Land Trust in the Southern Berkshires in
cooperation with the E. F. Schumacher Society has written
lease agreements, particularly for agricultural land, and
continues to refine these documents through actual practice.
Either of these organizations may be contacted for information
or consultation.
Repurchase of Improvements
Whatever form the management group takes, it is responsible
for collecting lease fees and monitoring fulfillment of
the terms of the lease, including the use of its first option
to repurchase the farmer’s home and farm improvements
at a formula price in order to keep them affordable for
the next farmer. In order to exercise this option the management
group must actively seek potential farmers by maintaining
a list of those interested in purchasing improvements and
leasing the land for farming. It can then proceed to resell
the improvements to another farmer at an affordable price.
In Summary
The preservation of farmland for productive agricultural
use will require an active commitment and responsibility
to long-term land management. This will mean working with
leaseholding farmers as they adjust to changes in farm practices,
changes in farm markets, changes in human circumstances.
As a local membership organization your land trust has
the resources, knowledge, and capability to best provide
the continuity necessary for land management. It may be
a new role for you as a volunteer organization, but it is
a role critical to the future of farming in your region.
It Takes More Than Land
Your responsibilities for farmland preservation do not
end with the lease arrangements. A conservation land trust,
through its management group or in cooperation with other
nonprofit groups in the region, may have to take additional
steps to support farm activity on its land.
Low-cost capital and secure markets are two important
factors in a successful farm operation. Federal loan programs
at one time provided the best source of low-cost financing
for farmers, but they were geared to large conventional
farm practices with land as security. In the past secure
markets meant a large supply of a single crop.
It may well be up to you to help develop a new form of
financing and marketing for this new kind of farm and farmer
if your land is to be actively farmed. Your members, already
committed to farmland preservation, may at the same time
be interested in investing in their own food supply by lending
capital or guaranteeing to purchase a percentage of the
farm’s produce.
Revolving Loan Fund
The Fund for Affordable Housing in Great Barrington, Massachusetts,
for example, is a low-interest loan fund that accepts investments
from local investors, paying them interest equal to the
rates of simple passbook savings accounts. It then loans
these funds to first-time home buyers at a rate just above
the interest paid to investors. Many of the investors are
vacation-home owners (an important but often neglected resource).
In the same manner, local farmers could attract investors
to a similar fund for affordable farming.
Loan Collateralization Fund
The Self-Help Association for a Regional Economy, also
in Great Barrington, pools the funds in individually-owned
passbook savings accounts of small investors at a local
bank. The owners of these accounts—SHARE’s members—agree
to let their funds be used to collateralize loans to small
businesses that cannot otherwise obtain financing. Members
form committees to review and accept or reject collateralization
applications. The bank charges 4% for administering the
loan with no risk involved. Members earn 6% on their accounts.
Thus, the total cost of the loan to the borrower is 10%,
about half the cost of conventional financing.
SHARE has collateralized loans to farmers for equipment,
seed, and building improvements.
Self-Financing Mechanisms
With the help of SHARE, two farm stands in Great Barrington
have jointly issued vouchers or coupons that they sell in
late fall when cash is short and then redeem in summer when
the cash flow is greater. Called "Berkshire Farm Preserve
Notes," they are sold for $9 and are redeemable for $10
worth of farm produce at either stand from June through
September. In the first year of operation customers of the
two farmstands purchased a total of $6,000 worth of Notes,
representing a low-interest short-term loan to the farmers.
When a similar self-financing program began at a local
restaurant, the notes were accepted by several Main Street
stores as payment for merchandise and by a few nonprofit
organizations for membership dues, encouraging circulation
and adding to the incentive to buy the notes.
Community Supported Agriculture
In the Community Supported Agriculture model a committed
group of consumers agrees to assume the financial risk for
the annual costs of operating a farm. They calculate a budget
in order to divide the entire cost of a season’s production
among the membership. The farmer is paid a fixed salary
in advance. At harvest time the members take home their
weekly share, whether a bumper crop or a reduced yield owing
to unfavorable weather conditions.
The Return to You
The success of these local financing and marketing programs
depends on the degree to which the local community identifies
with its farms and farmers. You can encourage that identification
through articles in your newsletters to members, through
sponsoring farm celebration days, and through work days
at planting and harvest time. This kind of participation
and celebration will in turn make your farmland preservation
efforts even more effective, at the same time introducing
community awareness and camaraderie that not only establish
good public relations but also foster real community.
People, Land, and Community
Your group knows that the health and character of the
community are inextricably associated with the health and
character of the land. Restricting the use of certain scenic
or environmentally sensitive parcels is critical to maintaining
the quality of life in rural areas.
But true farmland preservation implies active use of the
land, use in the best sense. The land must be farmed in
an intelligent and ecologically sound manner that improves
the quality of the soil and water and maintains open space
in a nonpolluting, productive working landscape. To insure
such use requires more than restrictions. It takes positive
encouragement in the form of affordability and long-term
security of tenure and investment.
Perhaps most importantly, farmland preservation requires
the patterns of mutual responsibility that constitute local
culture. Ultimately, preserving farmland is about preserving
community. The social and economic forces that affect both
must be taken into account. Only in this way can we maintain
the complex web of connections between people and land,
a web that sustains them both.
. . . [I}f we conceive of a culture as one body,
which it is, we see that all of its disciplines are everybody’s
business . . . To such a mind [competent in all its concerns]
it would be clear that there are agricultural disciplines
that have nothing to do with crop production, just as
there are agricultural obligations that belong to people
who are not farmers.
A culture is not a collection of relics or ornaments,
but a practical necessity, and its corruption invokes
calamity. A healthy culture is a communal order of memory,
insight, value, work, conviviality, reverence, aspiration.
It reveals the human necessities and the human limits.
It clarifies our inescapable bonds to the earth and to
each other. It assures that the necessary restraints are
observed, that the necessary work is done, and that it
is done well. A healthy farm culture can be based only
upon familiarity and can grow only among a people soundly
established upon the land; it nourishes and safeguards
a human intelligence of the earth that no amount of technology
can satisfactorily replace.
