The farm as a buffer in hard times

(Started March 2004)

I was born in “The Great Depression” of the thirties, and heard a lot about it growing up. It never did end for the West Virginia farm economy, at least until after my children grew up. It continued right through the forties and fifties for West Virginia farmers. For laborers willing to move out of state, to Akron (“The largest West Virginia town outside of West Virginia,” they said) or Baltimore, it ended with the boom of WWII.

However, the worst of it wasn’t too bad for our family, because they had something to sell – milk and eggs. People didn’t always pay their bills – Dad often let men work off their bills in farm work. He often said, “I have a half interest in half the kids in West Milford (where he delivered his milk) because I kept them alive at times.” There was some exaggeration in this, but certainly he supplied the richest and most dependable part of their diet. The reason the family got along well was because Dad’s sister, Aunt Lotta, who lived next door, had a dependable job (teacher) and Dad had something to sell that everyone wanted, and his price was right.

When I first came to Jesse Run farm one of the neighbors who had worked for Carroll Bond told me about being paid for work in potatoes and meat. This was not unusual at the time.

At the present time I see our farm, like most around, as being rather specialized, producing feeder calves and occasionally, timber. It has the capacity to do much else. The easiest change would be growing out cattle on grass. The farm could produce other food, gardens and potatoes for home use or sale (it once did), and space to drill water wells. A shop could produce furniture, do light repairs and maintenance on autos and farm machinery. Sheep have some possibility, but require a lot of labor, and must be protected from predators. And they need a building in winter.

Any of these things are a technology, and one would have to acquire the knowledge to conduct these enterprises, but that is only work. And you’d need a little capitol. A high speed connection to the Jane Lew telephone exchange (three miles) would allow computer work here.

If you learn to like it, the farm provides work that is as much fun as most recreation. Keeping the farm going is a balancing act, though.

As this is written in 2004, the United States is going in debt to foreigners at a rate of $500 billion per year. That is the value of imports minus exports. The only way this amount can be paid is by debt (which carries interest) and by selling American assets. Our debt grew by 6.3 times the growth of the economy in the fourth quarter of 2002, $2.3 trillion vs. $363 billion. Overseas investment payments are were $333 billion in 2002. The value of the dollar with respect to the euro is falling rapidly.

40% of the graduates of U. S. institutions of higher learning in science and technology are foreigners. Blue collar jobs have been exported to other parts of the world, and now white collar jobs, such as computer programming and low level management are going.

The population is aging, and a Social Security bust is bound to happen, they say.

The stock market is over inflated. The returns (dividends) do not justify the cost of stock, prices are held up by the expectation of gains in the value of stocks, capital appreciation. In other words, by speculation.

The average U. S. family carries an immense debt load. Interest is going down, which encourages more borrowing. Manufacturing is seriously sick, and can not compete with foreign industries. The economy is being carried by expanding consumer debt and government spending. Neither of these increase national wealth, but consume it. Our military is a massive financial drag for the nation, but affords huge profits for a few.

Much U. S. currency is used in exchange between foreign countries. (Petroleum, for example, is usually bought with dollars.) If the euro or some other currency increasingly becomes the medium of exchange, there will be a vast excess of dollars, far more than would be needed for U. S. commerce, leading to very serious inflation.

In short, it seems likely that bad times will return. How is the farm related to that?

In a depression stocks fall in value, some of them becoming valueless. The value of land falls, also, because much of the value of land is speculation on future worth, just like ownership of stock in corporations, this portion of the value is related to the general economic situation. Land does retain some of its value in a depression because there are always people in a depression who have money. Land is space, which is in demand, and it retains its productive value through a range of opportunities for the creative mind. And it is the home, the most important investment for a family, any investment councilor will tell you.

If there is a cloud on the horizon, the farm operation needs to be kept nearly debt-free, because after a fall occurs, the debts don’t disappear. The creditor will also be in trouble and will be desperate for his money. You must pay or loose it. If you loose livestock or machinery, you still have your home, but if you loose the farm, you loose it all.

Since the exact nature of the coming problem is not certain – it will not be a 1930’s type depression – I can not give specific advice, but must suggest you use your mind well. Get information, think ahead for the consequences of your action, get along well with your neighbors. In any case, you should be better off if you live on a farm managed for the times.

It is now April 2009, and we are not at the bottom, in spite of what they tell us.

The mortgage bust hit last fall. Experts tell us that about as many mortgages will fail in the near future as have failed in the past year. General motors plans to take a nine weeks vacation this summer, rather than the customary two weeks, and the other car companies are also about broke. Layoffs continue at a fast pace. Various kinds of corruption have made the headlines.

Even the military has been hit to some extent. The F-22 fighter appears to be discontinued, but the fight is hard in Congress. It is estimated to cost, including development cost, about $350M per plane. The F-35, a later, more versatile, high tech plane is being continued.

The average 401k retirement plan has lost 27% in the past year, according to CBS Nightly News. Many families are consolidating as a revetment against lost income. The army is tightening it’s enlistment standards, because hard times has made many young people choose that option. Bank loans are hard to get, credit card interest rates are rising and limits are coming down, many companies are advertising twice as hard and food is getting expensive in two ways – it is getting more costly to buy an article and the packages are getting smaller.

On the farm, timber has gone down to almost nothing, cattle prices are dropping and people are talking about raising a garden. That is a great idea for a farm in hard times. It is a lot of work, but it helps replace money for one of the largest expenses a family has. Another good project is potatoes. The yield is good, they can be prepared in many ways, and they have vitamin C, B vitamins, potassium and a number of minerals. The skins are a good source of fiber (needed by us old folks). They produce more food value for less work than about any other source and the technology is simple.

A technology that is relatively complex is keeping a cow or two. She must have food for the winter, but can survive, reproduce and give milk on hay and minerals. You will want a shed for hay storage and milking (no fun in the rain in winter) and fenced grass land, some of which must provide winter feed. You also need appropriate vessels for milking and storage, and refrigeration. This gets you milk, butter, cottage cheese. When she gets a calf (she must be bred once a year), that provides beef from the same diet. A dual-use cow must be carefully chosen. The bull can be any beef breed, or she may be artificially bred.

The cow’s manure is good fertilizer for many plants, and excess milk can be fed to a pig, along with household food waste, including parings, scraps and slightly outdated food. A cow or two and a few pigs should meet the meat needs of any family. There is a lot to learn if you have not grown up with the technology, though.

An orchard is a good bet too, lots of work and lots of new technology to get started, but once underway produces a lot of food with relatively little work. An orchard takes 4 or 5 years to get into production, however. Grapes, berries and rhubarb are good choices for side projects. All of these must be kept from the deer, which like them as well as you do.

Old timey favorites from the garden easily kept for the winter include kraut, buried potatoes, cabbage, Chinese cabbage, roots of various sorts, dried corn and beans of some types, and canned goods, such as green beans, tomato juice, beets, pickles.

Think about trading items, rather than buying them. You may be able to trade for skills, too, such as mechanic work, carpentry beyond what you can do yourself, and labor in some of these enterprises.

Use you head rather than your feet, as Br’er Rabbit said!

August , 2010. There has been some talk of “improvement” of the situation a month or so ago, but it is mostly “wishful thinking.” The U. S. economy needs 200, 000 new jobs a month to keep up with the population growth, they say, but new jobs amounted to less than one-sixth of that last month, and that was about the way it is running now. It is slowly dawning that there is no use to flagellate the consuming consuming public for not spending (70% of the economy). They are already deeply in debt and afraid of the future.

The problem is that the good jobs were sent overseas. The new ones that have been and are being created are low-paying. The beneficiaries have been, to a small extent, investors, and to a very large extent top managers. Unless we can put workers to work in good-paying jobs, they won’t have money to dispose of, to bring us out of the economic troubles. The only people who will have money to spend are the ultra-rich and they will not create jobs but will speculate with their gains.

In some places today the rate of mortgage failure is twice what it was earlier. Money is easier to borrow for agriculture than many other kinds of business, because the farm loan is invariably backed up, directly or indirectly, by the farm land itself. Beware! There are a lot of investors out there who would rather have your farm to see them through hard times than their money.