Growing, Owing, Gone
Richard Serbus didn't pick up his "Century Farm" award plaque at the fair last month. He had work to get done in his fields, and besides, he told the Minnesota Farm Bureau in his R.S.V.P., he's never been one for "big city driving." Serbus's family has farmed the same land for 100 years--a distinction shared by 250 other honorees this year. He owns some 500 corn and soybean acres in Renville County, a couple of hours south and west of the Twin Cities. His father farmed the spread before him, and his grandfather before him. His great-grandfather homesteaded 160 acres across the road.
When Serbus and his wife Mary-Nina got word he'd won the award in the first week of August, corn was selling for around $1.80 a bushel, down 60 cents since the same time last summer. By the time it arrived in the mail three weeks ago, corn was down another 20 cents, making the harvest he's about to bring in worth less than he'd imagined possible--even during the 1980s farm crisis--and his "Century Farm" citation all the more ironic. His more pressing worry now is that by the turn of the century, the Serbus farm will be on its way out of the family--parceled up and rented, sold off to the highest bidder, as good as gone. He hasn't gotten around to it yet, but he's planning to nail the aluminum plaque to his pump house.
Serbus is proud of the four generations of farmers his award praises. But the recognition is bittersweet. The price of corn is the lowest it's been in nearly 15 years. Soybeans are down, too. Hogs, milk, beef--all priced like it's 1983 again. Serbus is not alone in knowing that Minnesota farmers are spending this fall season harvesting debt--by conservative estimates, an average of 70 to 80 dollars' worth for every acre of corn in Renville County.
When he was a young man, Serbus says, he could stand on his doorstep, look out in all directions, and see small farms like his stretching off to the horizon. Now his property is an island in a sea of land leased to large-scale operations. Eleven farmers on neighboring spreads have given up their businesses since the farm crisis of the 1980s--surrendered to heavy debt, retired under financial pressure and rented out their acres, sold off to the new breed of large-scale farmers. When he cares to talk about it, Serbus can name six other farmers within 10 miles of his home who've committed suicide rather than face bankruptcy or foreclosure.
Today big outfits surround him--2,000-, 3,000-, 6,000-acre spreads planted by a single farmer and his hired hands or by a farmers' cooperative. Huge, state-of-the-art combines work the fields like giants grown up to fit a new geography that's turned massive in scale and global in scope. Serbus is beginning to feel anachronistic, with his century-old barn, mere 500 acres, and all-purpose John Deere. This time around, with prices going only lower and the cost of running a viable operation skyrocketing, he's gotten to wondering if the family farm is about to go down in history.
Still, Serbus would like to pass the farm down to a fifth generation. He'd like to think the market will brighten, that a hardworking man, like his youngest son Galen, could pull a future out of the fields. "I turned 62 this spring," he says, gazing around the farm at the old, rust-colored outbuildings where he's spent his life working. "I'm trying to retire. But with these prices I can see there's no way Galen can buy it out. If he throws in the towel, there will be no point in my going on. I'll just have an auction sale and rent the farm off. And to whom? The small farmers will be gone, and you'll be renting to someone you don't want to--some big cooperative with thousands of acres. I don't know what it's coming to. All I know is it's coming fast."
Renville County lies north of the Minnesota River in the center of the southern half of Minnesota. Highway 212 intersects the county east to west, running alongside the old Twin City & Western Railroad track. Small towns are lined up along it like beads on a string, clusters of houses and shops grown up around railroad grain elevators in Buffalo Lake, Hector, Bird Island, Danube, Renville, Sacred Heart. Olivia, the county seat with a population of 2,500, sits dead center and boasts two motels, a stand of bars along the main strip, a canning factory, and an Old West hotel where immigrant farm laborers live.
The rest of Renville County is a grid of two-lane roads, with miles of fields on either side--corn and soybeans mostly, and sugar beets, sweet peas, alfalfa, hay--all platted into meticulous squares within the section boundaries. With beans on both sides, you can see the horizon blurred by haze that shimmers up out of the crops. With corn, the byways turn into flaxen tunnels.
This county isn't the worst-hit farm region in Minnesota. That distinction belongs to the Red River Valley in the state's northwest corner, where five years of wheat scab and floods have taken turns wiping out crops and compounding stagnant commodity prices. There's fertile land in Renville, 600,000 acres of it, which ought to be more than enough for the county's 1,300 farmers to earn a living on. Even with the past few weeks of dry weather, farmers here are in for a bumper crop. The profusion of life and vitality is obvious in these fields; stand quiet for a while, with crickets whirring all around, the taste of plant sugar in the air, crops swishing when a wind comes by, and trouble seems as distant as winter.
But the same forces decimating the Red River Valley are eating away at the rest of the state's rural areas. Renville County, Redwood County, Yellow Medicine, Lincoln, Cottonwood, Kandiyohi--all tell the same story: auction sales in the newspaper, worried faces in line at the banks. Farmers who barely held on through the hard times in the 1980s are calling daily to elevator operators, who repeat yesterday's news--prices down and dropping.
For traditional farmers like Richard Serbus, survival comes down to simple math, figures you could scratch out on a slip of scrap paper. Steve Zenk, who teaches at the Ridgewater College farm business management program in Olivia, spends the better part of his days running the numbers on farm country. Take, he says, an acre of corn. Start the formula with the fact that most of the family farmers in Renville County rent more land than they could ever own in today's economy--at a going price of $90 an acre and up. Seed runs an average of $32 an acre. Fertilizer is $55, spray for weeds and insects another $30. Fuel and oil to run a tractor, nothing fancy, cost $11, with $19 for repair and maintenance. Tack on $7 to insure the crop against hail and wind damage, and $9 to dry the corn after harvest. Another $11 goes to the bank to service a farmer's operating or equipment loans. Average bottom line: $264 for one acre of corn.
Say you put in 400 acres of corn--a decent spread for a small-scale farmer in Renville County. Figuring with Zenk's averages, you will spend some $105,600 from planting to harvest. Most farmers only wish they had money like that on hand. They don't, so they take out a federally backed operating loan against last year's crop, which as a rule isn't sold until a year after harvest. Operating loans are short-term, with payment in full usually due within nine months. The average farmer in Renville County, Zenk says, carries a total debt load of $376,000, with a quarter of it--$94,000--due at the end of the year.
If you're lucky and the weather's right, the corn didn't dry out, burn from the roots up, or drown. The tractor didn't break down any more than you could fix without help. No blight or scab or worm hit your crop. And you stayed healthy enough to be out in the field every day. You can count, Zenk says, on a yield of 128 bushels of corn on the acre, the average for Renville County.
But then you tune in your radio to the financial crash in Asia and hear that one of your best customers is broke. The farm report announcer says that crops are good in Brazil this year, which means more grain coming onto the market and driving prices down--simple supply-and-demand economics. You phone up the elevator operator for the current price on corn--Is it going to go below $1.50? He tells you it already has. It's at $1.47 a bushel and going down. $188.16 an acre. $75, 264 for your crop. Bottom line: You just paid, this season, $30,336 for the privilege of raising 400 acres of corn. Tell that to the bank.
"There's the guy who won the sweepstakes," says Delores Swoboda. She's sitting at her kitchen table in her farmhouse with the latest press release from state Rep. Steve Wenzel in front of her: Short of something dramatic happening, it reads, agriculture experts predict that as many as 40 percent of Midwest farmers could face bankruptcy in the next year. "So this guy wins 10 million dollars--well, he can afford to farm quite a few years before that's gone." She throws back her head and laughs. Then her face takes on a grim look, and she reaches for another cigarette. "To me, it's a worse crisis than it was in the '80s. They got rid of most of the little guys already. I don't know if there's any hope of saving it."
A fourth-generation farmer and a no-bull rabble-rouser, Swoboda is known far beyond the borders of Renville County. In the early 1980s, she stood front and center in opposing hazardous wastewater dump sites along the Minnesota River. When the family-farm advocacy group Groundswell formed in November 1984, last decade's crisis had already begun to drive her neighbors in Renville County out of business. Swoboda joined the group as the editor of the Groundswell newsletter.
"We were farmers," she explains, "and we always felt like we had an obligation to our community and our little towns and schools and churches. If everybody's going to get foreclosed on and the big people are just going to get bigger and bigger, eventually you're not going to have any small towns or small schools. So we figured we could get together and do some demonstrating, go down to the capitol and in a very peaceful way let people know that there was a heck of a problem out here."
On behalf of Groundswell, she led rallies at farm foreclosures. She brought groups of farmers to St. Paul to buttonhole legislators. She mailed newsletters to more than 2,000 farm families around Minnesota. But she always figured the best thing she could do for farmers was to pick up her phone and listen. "There were so many farmers sitting at home going through depression," she remembers. "Instead of milking his cows, one farmer just sat on a little stool and looked out the window for three days."
Swoboda graduated into the role of amateur counselor, handling a one-woman hotline. Word among family farmers was that if you're in trouble, call Delores. And they did: As the '80s crisis deepened, she fielded more and more calls from families facing foreclosure, bankruptcy, and ruin. The trick then, she says, wasn't to tackle their financial predicaments long-distance--who could?--but just to get the callers talking. "A lot of times I could talk these people out of killing themselves. We did lose a couple that I had been talking to back in '89, '88. But most who did that never told anybody about their problems. Kept it to themselves. Didn't even tell their best friend or their wife that they were in foreclosure."
In the early 1990s, Swoboda says, the calls tapered off. By then the media had moved on. Country music stars and movie celebrities tired of making the American family farm their cause célèbre. The moment of crisis, if not its root causes, had passed.
But lately Swoboda's phone has been ringing again, just like old times. "I had one guy calling up," she says. "Three of his neighbors are renting land. They have no land for themselves that they own. He said 'I'm bringing those three over, and the rest of the busload is just people with one problem or another.' I thought, 'Jeez, has it come to this again? He's bringing over a busload of farmers?'"
In 1996 the Republican-controlled U.S. Congress passed what's known as the Freedom to Farm Act, a broad bill that overturned 60 years of national farm policy. Since the Great Depression, the federal government had played a key role in the country's agriculture: controlling the supply of commodities such as corn and soybeans, and ensuring farmers a bottom-line price for their products. Freedom to Farm changed all that.
The new legislation phases out government-guaranteed prices over seven years, and releases farmers from the centralized controls that used to direct what crops they could plant under federal-subsidy programs and when. Proponents of the bill say it essentially opens up the farm economy to the free market, allowing supply and demand, rather than federal bureaucrats, to dictate prices and production.
The result has been wild fluctuations in the price of supplies and major farm commodities across the country and in the Midwest. After the bill passed, corn shot up briefly to $5 a bushel, then just as quickly fell to $2. It's been declining steadily ever since. When the Asian economy began to falter last year, it put a severe crimp in the demand for American grain; the resulting surplus has driven prices even lower. "There's some serious volatility," says Ridgewater College's Steve Zenk. In the era of federally managed agriculture, he goes on, "we used to have some stabilization in the marketplace. When there was a nice, steady, even supply, prices didn't get too high, and they didn't get too low. By comparison to today, that looks pretty good."
Two years under free-market rules hasn't helped the small-scale family farmer. The change in policy, Zenk and others in his field agree, has increased the number of corporate and cooperative operations around Minnesota. As a result, the new rules--and the new agricultural economy--have also forced small-scale farmers either to increase their holdings just to stay afloat or to go out of business. Back in the late 1970s, Zenk says, the price for corn hovered around $2 a bushel, and stayed around there until prices began their current decline. At the same time, the cost of living--not to mention the cost of fertilizer, equipment, and other expenses involved in running a family farm--has continued to rise dramatically.
"A tractor in 1975 would have cost about $20,000 brand new," Zenk says. "A comparable machine now would cost $70,000 or $80,000. But we're still getting the same kind of prices [for crops] we got back in 1975." The minimum wage for most workers in America has steadily increased over the past two decades, but not for farmers. Imagine trying to finance a home today while earning 1975's minimum wage--$2 an hour.
Faced with bleak numbers like these, most farmers in Renville County have either stopped farming, or, when feasible, increased their arable land holdings. "Our answer all these years to offset the bad prices is, 'Well, we must need to grow more acres,'" Zenk says. Some measure of the pace of consolidation is captured in a 1992 survey taken by the U.S. Department of Agriculture's Census of Agriculture. The average size of Renville County farms has shot up markedly in the past decade, as the total number has inevitably declined. In 1987 there were 1,455 farms in the county. Twenty-five percent of them were larger than 500 acres, and consumed nearly 60 percent of the county's farmland. Within five years, these large-scale acreages made up 31 percent of all farms, and accounted for nearly 70 percent of the land. At the same time, the total number of farms in Renville decreased by 20 percent. Zenk points out that in the six years since, the trend has only worsened.
But not all of the small-scale farmers who've left their livelihood went bankrupt, he says: Some retired and moved to town, quitting while the quitting was good. Many farmers who've quit in the past decade now rent out their acres--in some cases to neighboring farmers under pressure to grow or go under, in others to large-scale co-ops or multinational corporations.
A good share of farmers who were put off their land went to work for these larger concerns--driving trucks, running combines. In today's livestock business, "vertical integration" gives corporations control over poultry from zygote to drumstick, and hog production is following suit with "contract farms" cropping up all over the plains. For example, Zenk explains, a corporate hog producer will arrange bank credit for a farmer to build a $350,000 barn to hold 4,000 pigs. In a contract agreement not uncommon these days in Renville County, the corporation then pays either for hogs by the head or a flat rate for the building; the farmer pays utilities and interest, and pockets the difference.
For her part, Delores Swoboda says she's seen the raw end of such a deal once too often. "I had a guy stop in here last week on a contract. He was madder than hell. They got the whole farm mortgaged because of that hog barn. They get so much for every hog that comes out the door. But then he's got to pay to run them fans and the electricity in there. The payment comes out of his check for the building, and then the interest, you know, and God, he said, by the time he pays the electricity he doesn't have anything left. He's just coming out with nothing.
"The big concerns are behind the majority of those hog ventures, the farmers' co-ops." Swoboda goes on. "It's big money. It's not just six guys who got together and decided to build a hog barn--it's Cargill, Tyson, Murphy. Let's say Murphy comes out here and wants to build a big hog barn across the road--3,000, 4,000 sows. Well, if that was Murphy Farms, we'd raise hell, wouldn't we? We wouldn't want it to go through. But if it's the neighbor? Well, Ed's got two boys, you know, and he's been raising hogs all his life. We shut up because we think Ed is a hell of a nice guy. Well, Murphy Farms built the building and got Ed to raise pigs for them."
Take the analysis a step further, Zenk says, "and we're talking about the capitalist system. Wal-Mart moves in and small businesses suffer. How is this any different? Whether we like it or not, that's the way it is. Farming is evolving like every industry does. But people have this romantic vision of what a farmer is: They think we all wear bib overalls and walk around and say what a good life we have. You know what? That simple life is hard to maintain. They don't ask how much land we farm when we go to the grocery store. They just give us the bill."
"Christ, there was one--I'll never forget it." Delores Swoboda lights another cigarette, clears her throat, and smooths her palm over the kitchen table. "This was '88, '89. Neighbor lady came home and her husband wasn't there. She called upstairs. Nope, wasn't there. You know, she figured he was out somewheres on the farm. He'd be home. Goes about making dinner. Well, she needed something from the basement and opened the door, and she noticed the light was on down there. So she goes downstairs, and oh, for the love of God, there he was. He'd taken a shotgun and shot himself. His neighbor, his best friend, was a farmer I'd been talking to because he'd been having his problems. He called me up that night, a great big fella he was, and he was crying so as I couldn't even understand him. I says, 'What's wrong? What happened?' He says, 'Oh, Jesus.' Says his best friend's name. 'I just cleaned his brains off the wall.' His friend's wife had called him up after she found the body and he had gone over there to help her out. It'd come in the mail that day, the foreclosure notice. He found it sitting there on the kitchen table."
At the Bird Island Farmers Elevator Co., midway across the county on Highway 212, a farm truck loaded with corn is idling in the gravel lot. It's the middle of August, a hot and rainless day. Inside the main office, a farmer slouches against the countertop, stroking his big beard and swirling the coffee in the bottom of his plastic cup. The air smells of chaff and dust. A dry-erase board lists the day's prices: Corn is at $1.66 a bushel. John McNamara, who manages the elevator, pokes his head out from his office where he's been watching prices flash across his computer screen. He nods at the farmer. "Up two cents. You want to sell, or hold off to see if it goes up?"
The farmer stares down into his cup for a second, then shrugs. "Can't sit here all day drinking coffee."
The truck pulls up onto McNamara's new digital scale and weighs in. Then the elevator hands tip the truck bed up, and golden grain pours out into a grate on the floor. The elevator rattles into motion, lifting its load 75 feet into the air and dumping it into the storage bin.
At $1.66, the farmer inside is looking at the losing end of a gamble. Most farmers around Renville are still hanging on to as much of last year's crop as they can, holding out for a price jump that so far hasn't happened and, if the free market keeps on the way it has, likely won't. If a bill comes due, if a machine breaks down, if he needs to buy and set up a new bin to store this year's crop alongside the last, a farmer might sell a truckload. If the price goes back up to $2, he might sell two.
The elevator runs on the same principle. It's essentially a collective arrangement among farmers to market their grain to corporations that sell overseas or put food in American grocery stores. Any farmer can sell his grain to the co-op. And he can buy shares in the business; in a good year, the co-op pays dividends from its net profits. The Bird Island Farmers Elevator Co. is the last small-town co-op in the county. All the others have merged into larger concerns that serve several towns. A fair number of co-ops across the state and the nation have even hooked up directly with giant multinationals: Archer Daniels Midland, and other giants like it, runs co-ops in towns all across the world--a harbinger, perhaps, of "vertical integration" for corn and soybeans down the road.
Because of the current poor prices, McNamara has been hanging on to last year's grain, just like the farmers. Every day managers like McNamara check prices, and every day their inventory is worth less. Nearly 4 million bushels sit in elevators around the county.
"Our biggest problem this fall," he predicts, "is going to be storage." With such an enormous stockpile in the wings, and demand down and going lower, any free-market economist could tell farmers what most of them already know: what they'll eventually get for their grain won't begin to cover the cost of raising and storing it, much less put a dime in their pockets to pay off debts.
McNamara grew up on a farm a mile north of Bird Island. He graduated from college in Willmar, then worked his way up from unloading trucks at the elevator to the manager's desk. The changes he's seen in his lifetime worry, even frighten him. And the future of his business looks grim. "We hear about the Red River Valley and how tough it is up there," he says. "I'm not saying we're in that situation. But we're headed that way. We have a good crop, we just don't have the price. And I tell you--we lose farmers, and we'll lose these small towns. We saw that in the early '80s, when we ran through this same type of thing."
McNamara's elevator is vulnerable in the same way smaller farms are. He's not doing the kind of high-volume business that can keep him solvent through hard times. His small size means his margins are tighter than those of his large-scale competitors--making it more difficult for him, and his farmers, to sit on grain and wait for prices to pick up.
"The way it looks, because the market is so depressed, unless we have to sell it, we're going to hold on to it and see what the price does. This elevator right now is sitting full of corn. We won't put any grain on the ground. You start putting it on ground, it spoils. Then the elevator is the one that picks up the tab for that. My big concern is, Where are we going to put these bushels coming in this fall?"
At that, McNamara falls silent. The empty truck weighs out, and rumbles across the gravel lot and off toward the highway. Then he says, and there's an edge of anger in his voice now: "I don't want to get to sound like a radical, but a lot of people piss and moan about farmers with their mouths full of food. You have to remember where that food on your plate comes from. These people work their ass off to do it. But they want to make a living, too. We might not see it in our lifetime, but you'll get to a point where it's just a few outfits raising. Then we're going to have high-priced food. 'Cause they're going to say, 'OK, if you want it, here's what you're going to have to pay.'"
"I just heard they sent up another one of them billion-dollar space rockets." Richard Serbus is standing in his front yard by the John Deere, arms crossed, spitting tobacco juice into the driveway. The radio reports that a satellite rocket in Florida exploded on liftoff, a billion dollars' worth of sparks and fire drifting back to earth. In a few hours, Serbus will climb onto his tractor and head out to the fields with a couple of neighbors to bring in hay for the cows. Corn is down another penny. In an hour, it'll be down another. Every penny off the price puts Serbus $200 deeper in debt.
"There's no reason why we can't have a three-dollar base price on corn, and at least six and a half on beans," he says. "The government's more concerned about building a space capsule, or space city, or whatever they're doing up there. But for the ones who are feeding them? They don't care."
Serbus credits his thrift and his cows as the reason he's still in business today. "When everybody else was out vacationing, we were into our milking. And even though sometimes you're not making that much money, you're not out spending it." He's also managed somehow to keep his debt load low, paying cash as often as he can afford it, and taking the balance out of his household budget. Just, as they say, scraping by and making do.
During the '80s farm crisis, he stopped spraying his crops to save money, and ended up harvesting thistle and weed along with the grain. "You buckle your belt real tight," he says. "It was tough. The most upsetting thing of it was that smaller farms were snuffed out--and the larger ones, the federal government forgave their debts. I could name four of them around here. One was a million dollars. Just forgave them." Stories about injustice, these days, are standard fare among farmers around Renville County. There's this one Serbus tells, confirmed by his neighbors with the same stoic rage. There's the one about farmers, without naming names, who've declared bankruptcy but managed to salvage their farms in court. The one about the 2-year-old kid who suddenly owned 1,000 acres and a $200,000 combine after his grandfather went belly-up and transferred the title to ensure that the property stayed in the family. Stories about despair, about suicide and bizarre deals made on paper just to keep from owning nothing.
Serbus's youngest son Galen is short and stocky, with wide eyes and a ready grin. At 24 he carries himself with the energy of youth, every move quick and agile. While his father prepares to go haying, Galen slips on his boots, cranks up some rock 'n' roll on the boom box in the dairy barn, and starts milking the cows--a chore he's assumed as part of his try at taking over the farm from his father. He buys all the supplies for the 20 cows, milks them twice a day, and pockets the profit. He's full of ideas about the farm--somewhere between a young man's foolishness and strategic planning for a future that holds little stock in traditional, small-scale agriculture. "My dream," he says, "is to get a decent milking system, with piping, one of those computer boxes that run the whole works." In the meantime, he uses a couple of five-gallon milking machines for the painstaking process, cow by cow.
When he got out of high school, Galen went to work on a factory farm, a huge hog operation nearby that housed thousands of sows. He worked his way up, from artificially inseminating sows to training new employees. In his early 20s he was already earning what he considered good money--$23,000 a year. All the while he was looking for a way to get back on the farm.
He's quit the job, and still he's trying to find his way into the farm. "It just doesn't pencil out," he says, "I just can't see the way to make it work." Last year Galen put in 30 acres of hay in a move he thought would save him on feed for the dairy herd. His dad gave him a family discount on rent, loaned him seed and fertilizer, and let him use the machinery for free. He skipped crop insurance because he couldn't afford it. But a late freeze destroyed the whole crop.
He seeded his land with corn then, hoping to recoup his losses. Corn came up all right. Even with last year's high yields and a price of around $2 a bushel on corn, Galen didn't stand to gain much from his crop. When he stacked up what he'd made from selling corn against what he owed his father, he found that he'd just broken even. He's still paying back his dad, but he's thankful, at least, that he didn't borrow from the bank.
"If you'd talked to me before last year," Galen says before heading off, "there was no doubt in my mind that I was going to do this. Absolutely. I quit a decent job to come back to the farm." Now? He shrugs. "I don't know. It's one heck of a decision I'm facing. I don't know what I'm going to do." This spring, Galen didn't plant any crops on his father's land. He's sticking to milking, hoping to build up a nest egg. In the meantime, maybe commodity prices will come up again.
His father is hanging on for another year, and probably another. "The sooner I cut out and retire, the harder it's going to be on him," he says. "To make it easier for him, I'll stay in. Give him more time." He shoots a dour look at the dairy barn, inclines his head toward the faint strains of rock 'n' roll and the clanking of milk cans. "He's losing interest. You can tell it. And I can't even really blame him for that."
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