Is there a future for farming in growing Gallatin Valley?

ERIC DIETRICH

Bozeman Daily Chronicle

BOZEMAN (AP) - The vista on Dylan Strike's organic farm, just outside Bozeman on a sunny fall afternoon, is nothing short of idyllic.

Rows of vegetables stretch across neatly kept acres along Stucky Road. Beets and carrots sit cozy in rich soil, while arugula and kale covered with insect-protecting cloth await harvest.

Workers pull black radishes out of the soft ground as a tractor putters along nearby. Twisting off leaves with practiced motions, they crack jokes about eating the tubers raw, dirt and all.

In the distance tower the Bridgers, not yet dusted with snow. And below them, a field or two away, are the homes and businesses of the ever-growing city, a reminder that there's more than just seasonal change in the air.

Such is the lot of agriculture in the Gallatin Valley, long one of Montana's great breadbaskets - and in recent years the state's fastest-growing population center.

With new residents streaming in by the thousands, there's plenty of demand for new homes and businesses, many if not most sprouting on farmland. There's plenty of worthy angst, too, over what the growing city's hunger for land and water means for the industry that planted it here in the first place.

An organic model

At 25, Strike is among the youngest farmers in the valley. As he brings his third season to a close on leased land, he's running one of its more hopeful operations, too.

He initially came to Bozeman from Pinedale, Wyoming, in 2009, planning to study land rehabilitation at Montana State University. By graduation in 2013, though, he'd caught the farming bug from the local foods movement - getting into the field, as he puts it, "from the activism side."

Local farms mean fresher food, he said, as well as less environmental impact from shipping and more security from far-flung disasters like California droughts. And money spent on his produce stays local, he added.

"Knowing your farmer is huge," he said. "Just being that connected to your food benefits the community as a whole."

With plenty of demand in Bozeman for high-quality organic food, his business is booming. Working six acres of leased land off Stucky, two left fallow as part of his crop rotation, Strike said he's grossing nearly $300,000 this year growing vegetables and selling them through farmers markets, farm shares and local grocers.

In fact, he said, there's enough unmet demand that he'd like to expand - if only he can find the land.

The temptation to sell

On the opposite end of the ag spectrum, traditional farmers - many of whom have had Gallatin Valley land in their families for generations - have their own worries as they try to hold onto their heritage.

"With all the growth in the valley, it doesn't look great for agriculture," said Carol Metcalf, whose family has farmed and ranched land east of Bozeman since 1910. "It's a really tough operation anymore."

As more and more ag land is converted to subdivisions, Metcalf and other famers say, it becomes harder and harder for longtime ag operations to turn down offers from developers - in lean years, especially.

With less land available for crops or grazing, farmers new and old have fewer options for expanding their operations. And traffic from rural housing developments makes it harder to move livestock and equipment between fields - particularly when newer arrivals don't have the patience to wait behind cows or tractors.

"The temptation, of course, is to sell some of that ag land to grow condos or houses or who knows what," said Sherwin Leep, another longtime farmer. "It creates a temptation when you're struggling to make money on the land."

"It seems like there's always a rich guy who wants some room around him," he said.

"I liked Bozeman when it was a small farmer-rancher-oriented town," Metcalf said. "I think we should have built a big fence about 50 years ago."

Harsh economics

The economics of land development are such that it's nearly impossible for farmers to compete with subdivisions in a pure market sense, even on the best soil.

Irrigated land suitable for producing a crop like potatoes leases for about $100 an acre a year, according to data collected by Montana State University extension agents. For his current lease, Strike said he's paying $200 an acre.

In comparison, undeveloped properties currently for sale in the Bozeman area are listed at a median price of about $29,000 an acre, according to data provided by the Gallatin Association of Realtors. And finished homes on quarter-acre lots routinely sell for upward of $300,000 apiece.

As a result, when it comes time to transfer the ownership of ag land, there's little - at least in a monetary sense - keeping property that's desirable for development under the plow.

Higher land valuations based on development potential make it harder to transfer farmland between generations, even within families who would prefer to keep their fields in production.

When inheritance taxes are assessed based on development value, for example, families can be forced to sell off portions of their holdings in order to pay. In situations where younger farmers need to borrow money to buy out their parents, high land prices make it harder to pay off debt.

And, for aspiring farmers like Strike, who don't have family land to get them started, high land prices are often a barrier to entering the field at all.

Strike, for example, has been able to get a toehold in the industry with his current lease. But, without land he owns outright, it's harder for him to justify investing in his soil or buildings like permanent greenhouses.

"We can't grow until we have that security, owning land," he said.

With his premium business model, Strike thinks he can afford to pay as much as $20,000 an acre for land. But, because he relies on direct sales to farm-share customers, he can't relocate too far outside the city - meaning his expansion dreams end up in direct competition with developers.

Water crunch

Water - while less of an issue for small-scale organic farmers like Strike, who's able to make do currently with the yield from a domestic-sized well - is also a worry for production-scale producers.

As with land, new development can handily outbid farmers when water rights end up on the market. As a result - to the extent growth fuels new demand for water in cities and rural subdivisions - Gallatin Valley agriculture is fighting the same sort of losing battle with irrigation water that it is with farmland.

Representatives of the city of Bozeman, for example, say the city has enough water supply to support a population of roughly 57,000, according to its 2013 water resource plan, a level it's projected to hit as soon as 2025 or 2030.

When it exhausts its current resources, the city will almost certainly lean on agricultural water to keep its utility customers supplied - and is already buying up rights as it has opportunity, trying to stay ahead of the curve.

"It has the effect," Leep said, "of slowly pushing some of the agriculture out."

"In order to feed the masses," he added, "we need production agriculture."

While Bozeman can shell out north of $5,000 an acre-foot for water rights - roughly a cent-and-a-half a gallon - Leep estimated that water-starved farmers are limited to paying more like $1,000 to $2,000, depending on their situation.

An acre-foot is the volume it takes to cover an acre, roughly the size of a football field minus the end zones, a foot deep. When full, Hyalite Reservoir holds just over 10,000 acre-feet of water.

For its part, the city, where at least a third of municipal water ends up applied to lawns and gardens, is hoping conservation measures can stretch its supply, minimizing the impact it ends up having on what's available for ag.

Another possibility - with non-trivial environmental and financial costs - is building new reservoirs to capture more spring runoff to tide farmers through during the low flows of summer. And there's opportunity for ag users to be more efficient with their water use too, Leep said.

"I really think we have enough water around here," he said. "But it needs to be used correctly."

Paying for preservation

In recent years, the thrust of farmland preservation efforts in the Gallatin Valley have revolved around conservation easement programs, which provide a voluntary mechanism for property owners looking to shield their land from development.

The easements work by having property owners make an agreement with a nonprofit or government agency, essentially signing over their right to develop the property while retaining ownership. If they or their heirs end up selling down the line, the buyers can continue uses like farming but can't subdivide.

Depending on the situation, property owners can receive tax benefits or compensation in exchange, providing an incentive that can help close the financial gap between development and preservation.

Nearly 122,000 acres of farmland and other open space in Gallatin County are currently protected with conservation easements, with the bulk of easements held by The Nature Conservancy, Montana Land Reliance and the Bozeman-based Gallatin Valley Land Trust.

"It's a good tool for us," said Leep, in the process of placing a conservation easement on his third piece of farmland. "I wish there was unlimited funding for it."

With funding, though, lies the rub - when easements are granted with compensation for property owners, the money has to come from somewhere. To that end, Gallatin County voters have twice approved bond measures for open space preservation, endorsing $10 million in spending in 2000 and another $10 million in 2004.

A dozen years after the 2004 bond vote, though, that money is starting to run out. And, though the open space tax amount is relatively small - about $10 a year on a $250,000 home - a renewal has to compete with other priorities like the city-county law and justice center project and a potential second high school.

The future ahead

Bozeman's aspirations to build up instead of out may also play a role in saving ag land from bulldozers - housing more residents in denser apartment buildings and townhomes and fewer in detached homes or rural ranchettes that consume significantly more land per family.

"Cows not condos" sentiment aside, it's entirely possible that having enough condos in Bozeman's future could be the key to preserving space in the Gallatin Valley for cattle, some say.

However, as the city sees denser mid-rise developments proposed, around its downtown area in particular, it's also meeting increasingly heated opposition from neighbors. Developer Andy Holloran's Black-Olive proposal, for instance, seen as a bellwether project, has attracted a steady stream of comments from neighbors at recent city commission meetings, with most expressing opposition over aesthetic impacts and parking overflow.

Additionally, as the valley struggles with housing affordability, there's a trade-off to be made between adding home supply in new developments and preserving ag land at the cost of pushing home prices higher.

In all likelihood, the future is rosiest for niche famers like Strike - with his high-labor, high-yield business model that lets him coax more economic value from his soil than is possible growing wheat or potatoes at scale.

And, at least for now, the land struggle seems to be going his way. As he looks to scale up his production, Strike said, he signed a long-term lease in September for another five acres, land included in a conservation easement.

In the past few weeks, he said, he has also found land to buy outright a 10-acre farmstead that's within his means if the financing works out - in part because its owners are up for cutting a young farmer a bit of a deal.

"They're excited about selling it to me," he said, "because I'll keep it in agriculture."