Earlier this year, the World Economic Forum (WEF) stated (source 1) that, “The financial crisis gives us a stark warning of what can happen if known economic risks are left to fester.”  The WEF went on to highlight what it perceives to be a key economic risk, “We are living in a water “bubble” as unsustainable and fragile as that which precipitated the collapse in global financial markets. We use water unsustainably.” Additionally the report predicted that, “worsening water security will soon tear into various parts of the global economic system. It will start to emerge as a headline geopolitical issue…We are now on the verge of water bankruptcy.”

A separate report by the World Wide Fund for Nature (source 2) pointed out that water shortages are becoming increasingly costly. It said, “California’s current water crisis management will cost taxpayers an estimated $1.6 billion per year by 2020.” The report went on to say that “Australia’s emergency overhaul of its water supply regime, necessitated by 10 years of over-abstraction but precipitated by the 2007 drought, is expected to cost $10 billion” and China’s plans to “channel billions of cubic meters of water from the Yangtze River in support of farmers along the dwindling Yellow River involves untold costs.” The report also showed that since 1991, Libya has been pumping 730 million cubic meters of water a year from an aquifer under the Sahara at a cost of $25 billion a year.

In addition to the direct cost of responding to water issues, there is also a toll in terms of lost output. To that point, the World Economic Forum (source 1) wrote that, “The ongoing drought in Australia is expected to shave 1% off the country’s GDP in 2006-2007.” Meanwhile, in the U.S., water shortages are reported to have cost the agricultural sector $4 billion per year over the past two years.  Additionally:

• Some estimates conclude that environmental degradation and pollution cost the Chinese economy between 8% and 12% of its GDP annually.
• The crisis in water and sanitation holds back economic growth in sub-Saharan Africa, losing 5% of GDP annually, far more than the region receives in aid.

Similarly, in its most recent World Water Development Report, (source 3) the United Nations pointed out that, “While the scarcity of freshwater is felt acutely in Africa and West Asia, water scarcity is already an economic constraint in major growth markets such as China, India and Indonesia, as well as commercial centers in Australia and the western United States.”

Specifically addressing the issue of water as an economic constraint, the Pacific Institute stated (source 4) that inadequate water infrastructure and water-management capacity, “Constrain companies’ growth, disrupt operations, and necessitate costly investments in equipment and technology.”  The Pacific Institute report made another important point that “Countries with poorly developed infrastructure are also less able to decouple their economy from climatic variability, which puts not only agricultural, and food sectors at risk, but other industries as well.”

-In other words, in addition to water shortages caused by a supply-demand imbalance and/or pollution, climate change is another factor that threatens some countries with “water bankruptcy.”

Sources
1 The Bubble Is Close to Bursting, January 2009
2 Understanding water risks, March 2009
3 United Nations World Water Development Report 3, March 2009
4 At the Crest of a Wave: A Proactive Approach to Corporate Water Strategy, September 2007

Whether you are a beginner farmer or just trying to grow the size of your operation, finding land to farm on is tough.  Here are a few tricks to tracking down farm real estate to buy and/or lease.

To Buy

•    The trick is to buying farmland is to find it before it goes on the market, and the best way to do that is through a network of people who would know the land is about to go on the market. Build friendships or relationships with rural appraisers, farm insurance reps, community trust fund managers, farm managers, farm credit lenders, community bank lenders, and management at certain co-ops. These guys all know the inside of the business and might be willing to help you, if it helps one of their existing clients, customers, or associates.

•    The Internet is obviously the easiest and widest reaching. Try checking out Loopnet.com and LandAndFarm.com as a resource.  Also check out LandsofAmerica.com and LandWatch.com.

•    There are also several large farm real estate players such as Farmers National based out of Omaha, and Westchester real estate based out of Illinois. Both companies actively sell land throughout the country. You should also look at using a local realtor that specializes in rural properties.  Google your area name and “farm realtor” or “rural real estate.” Consider taking on a realtor as a buyer’s agent.  They do this full time, and probably already know every land owner in your area so they will most likely be more efficient than you.

•    Wait for the auctions.  This takes a while, but can be an effective means of targeting larger operations. 

To Lease

Finding land to lease is equally difficult.  This best strategy requires a lot networking like above.  Another approach is to blatantly high offer a higher rent to try to persuade a land owner to take more than he is currently getting. Many farm rent deals are NOT on paper or are year to year, so technically the land owner can usually make a change.  Be advised, this is a tough game.  Your margins will be thinner because of the high offer and smart land owners will be concerned that you will skimp on inputs to make up for the higher offer. (thus mining the nutrients out of the soil and not replacing them)  Many older farmers are considering retirement, but just aren’t quite ready to give up the reigns.  Talk to the farmers in your area, especially the ones with kids that don’t want to farm and explain your plight.  Tell the current farmer/landowner that you only want to rent his “least desirable” land. (this doesn’t always mean lowest yielding) In other words, don’t try to bump the old man out, solve a problem for him. Most large scale growers are not fortunate enough to farm one contiguous piece of property.  They end up driving all over the county to to attend to pieces of property they have assembled over the years.  Help them by taking over the farthest properties from the central farm.

Alternative Idea

I know many of you are hoping to expand or get into large-scale commodity production, but I have one other suggestion.  -Consider small scale farming. 

There are a lot of people making a living and leading a fulfilling farm life on small acreage.  I recently heard of one example where a group rented 5 acres or so from their city (next to the city water towers) and started a small organic farm. Local food produced in small scale is very hot right now.  The produce commands a premium price, and it is fairly easy to find 10 acres of grass from some large company, local municipality, non-profit group, church, or other group.  Everybody is getting pinched right now because of the economy, so it’s a good time to make an offer.  Also, the land owner gets to tell everyone how great they are for helping out a small farmer, or helping to bring local food to the area, and they don’t have to pay to have that land mowed or kept up. (never underestimate the PR power here, and be sure to remind the land owner of that) Another upside to small scale farming is that you won’t need to buy such expensive machinery. Here are a few books you should read:

1. Five Acres and Independence: A Handbook for Small Farm Management   ~ Maurice G. Kains 
2. Successful Small-Scale Farming: An Organic Approach (Down-To-Earth Book)   ~ Karl Schwenke
3. Making Your Small Farm Profitable: Apply 25 Guiding Principles/Develop New Crops & New Markets/Maximize Net Profits Per Acre   ~ Ron Macher
4. Small-Scale Grain Raising, Second Edition: An Organic Guide to Growing, Processing, and Using Nutritious Whole Grains, for Home Gardeners and Local Farmers   ~ Gene Logsdon
5. Small Scale Livestock Farming: A Grass-Based Approach for Health, Sustainability, and Profit   ~ Carol Ekarius

–If you take this advice, I suggest you drive around and look for large grassy fields, sometimes with old vacant buildings on them or near municipalities like water treatment plants or even parks.  (avoid old factories and gas satiations since you won’t know what contaminants might be in the soil. You don’t want to have to do a Phase 1 Environmental on day one) Next, go to your county courthouse and look up the ownership records to find out who owns the land.  While you are there, find out what the annual taxes on the property are. Lastly, call the owner and make a ridiculously low offer. I mean really low.  Offer $1 a year per acre and explain that they will be helping a small farmer get started and that you would be happy to participate in any PR about the new venture.   If they don’t bite, who cares?  Say “there’s nothing wrong with asking right?” –And then make them a real offer. Again, very low, but now any number will sound big compared to $1. Now offer the owner the equivalent of the annual property tax and explain that you are actually saving them money.  (How you might ask?) The owner is most likely paying the property tax plus some form of upkeep like mowing which wont be nessessary if you are farming the property.

 Happy land hunting and Good Luck!

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