The United States seems unable to escape its past when it comes to the mistakes it has made again and again. It’s particularly notable in the case of boom and bust real estate cycles; even though the writing is constantly on the wall and anyone with a minimal knowledge of economics, history, and the mechanisms of the market can see what is going to happen, people still throw themselves into real estate speculation and are shocked by the outcome. Such activities brought about the most recent economic collapse, which many people seem to want to claim is over, and they’re about to push the creation of another speculative bubble that will blow up in fantastic fashion.
And this is a bubble many people are not aware of, because they are not in touch with the rural regions of the United States and the agricultural industry.
In the last 20 years, the United States has lost significant chunks of its arable farmland to development. There are a number of reasons for this; part of it has to do with the shrinking numbers of family farms, with people selling off their land as they leave farming altogether. Small farmers are being pushed out by the rise of industrial agriculture, which makes it extremely difficult to compete, and fewer members of the younger generation are interested in putting in the time, energy, sweat and labour required to start farming.
While some of that land winds up in the hands of big agriculture, a lot of it has ended up with developers, who use it to establish housing developments, many complete with cutesy rustic country names. Urban sprawl stretches its tentacles into rural areas, and people are encouraged to establish rural vacation homes or consider retiring to communities with names like ‘Blueberry Hill Farm’ even though there are no blueberries, or farms, in sight because they were bulldozed under long ago for construction.
There is a tragedy on a number of levels; one, unsustainable development is intolerable, and it’s a crisis spreading across the United States. These developments are not designed efficiently, and they certainly don’t promote density and preservation of natural spaces. For another, they involve chewing up good farmland; prime land that has been carefully managed and handled for generations to produce crops. Small farmers used to producing with composting and other natural means have spent years building up their soil, and housing developments trash it, making it useless for farming and, of course, covering it in houses, roads, in-ground swimming pools, and all the other accouterments of ‘luxury living.’
The loss of farmland also represents a tremendous loss of heritage, which is sad in and of itself. Particularly with rising concerns about food security, it’s troubling to think that small farms, which focus on sustainable farming, crop diversity, and other means that tend to promote food security, are dwindling in number. Industrial agriculture focuses on high production at all costs, even if that means monocropping, the heavy use of chemicals, and the destruction of soil and water. For every small farm that dies out, opportunities are lost, and this country loses a little piece of itself.
And, of course, the sales of farmland are spurring a rampant speculative bubble in real estate in these regions. Suddenly, farmland is worth much, much more than it once was. A number of farmers are taking advantage of that with land sales, chopping their farms into pieces to get funds, and people are willing to pay large amounts of money for a chunk of farmland. As prices are driven artificially high by developers and industrial agriculture, they don’t just climb out of reach for small farmers interested in acquiring land to start out; they also reach bubble status, and bubbles tend to pop.
The problem is compounded by massive farm loans drawing on the land as collateral. As long as the land remains valuable, farmers taking out multimillion dollar loans are in a comfortable position, and they can use the funds to acquire new land, improve their existing land, and invest in farm equipment. But as soon as that bubble starts to pop and those loans come due, farmers will be underwater. That’s already starting to happen in some regions of the Midwest, where farmers are declaring bankruptcy as they realise they can’t afford the service fees on their loans.
If any of this sounds familiar to you, it should; it’s basically exactly what happened with the speculative bubble that crushed with spectacular results in 2008. The stakes are equally high this time, as financial derivatives based on farmland and farm loans, speculation in farming futures, and related financial instruments are being happily and readily traded. And behind the financial bubble comes a huge backwash of incalculable damage to US farmland and the ability to produce food independently and sustainably; what happens when all those developments on prime farmland are abandoned, sitting empty, on land that cannot be reclaimed? What happens when small farmers are so limited in number that it’s difficult to preserve the knowledge of sustainable but still practical on a large scale farming techniques?
Even as people in the cities revel in their backyard gardens and urban farms, the fact is that farmland is critically needed everywhere, and destruction of farmland with the simultaneous creation of a financial bubble is a potentially devastating combination. More people in urban areas should be thinking about rural land speculation, because it’s going to affect them whether or not they’re witnessing it first hand, and we need to be talking about how to stop it before it’s too late.