Feature 1 — Propane in Agriculture
Agriculture & Propane: A Window Into a Decades-Long Trend
How the continuing decline of small-sized family farms feeds the broad trend of consolidation
By Johnny Nickel
The historical race to control the flow of oil — seen today in conflicts with foreign leaders that affect people worldwide — is captured in dramatic fashion in Daniel Yergin’s Pulitzer Prize-winning history of the oil industry, “The Prize.” From its beginning, the oil industry has been comprised of small-operation risk takers and capitalistic empires, most dominant among them being John D. Rockefeller’s Standard Oil. Prior to the boon of Thomas Edison’s ingenious innovations in electricity, the primary market for crude oil extract was residential and commercial lighting.
In short time, Henry Ford’s automobiles created an entirely new market for oil. In the span of around 50 years, the oil sector underwent massive changes, from the chaos of the initial rush to extract the “black gold” from small Rust Belt towns, to the creation of antitrust laws, to the explosion of demand for oil in the newborn automobile market.
Extreme changes at such a quick pace leave a mark on communities that can sometimes get left behind as the winds of the market shift. Yergin refers to a chilling example from the early years of the oil boom: the small town of Pithole, Pennsylvania. The drilling town was essentially erected overnight after oil was discovered in the quiet hills of Pennsylvania and thousands rushed into the area to capitalize on the natural resource. But the good fortune would not last for long.
“The oil production abruptly gave out,” said Yergin. “To the people of Pithole, this was a calamity, like a biblical plague, and by January 1866, only a year from the first discovery [of oil], thousands had fled the town for new hopes. The town that had sprung up overnight from the wilderness was totally deserted.”
The Decline of Small Family Farms
What does any of this have to do with modern propane markets and the agriculture sector? As in most lessons from history, it might be more than initially thought.
A well-known trend that has been taking place for many years is the gradual decline in small, family-owned farms. This has immediate impacts on the way propane marketers and distributors must assess and evolve their operations. While the agriculture sector accounts for only 9% of propane sales (according to the Propane Education & Research Council), shifts in this vital industry often impact other markets as well.
And unlike the gas industry’s first historical success in the lighting market, the agriculture industry has always been an example of what economists often call a “necessity market,” a sector that is essential to the survival of a community. In the words of novelist Wendell Berry, “eating is an agricultural act.” For this reason, most governments in the world implement some form of subsidization in the hopes of stabilizing this essential market.
In its own way, propane is playing a role in this same story. Since the 1940s, propane has stepped in to serve a variety of needs in the agricultural market, from powering tractors and grain dryers to ensuring livestock are kept warm. The portable fuel is an optimal choice for the remote operations of rural farms. But since the 1940s, much has changed in agriculture.
When propane was first introduced into farming operations, there were over 6 million farms in operation — a number that has dropped to fewer than 2 million today. In many ways, propane helped fuel this transition. Larger farm operations made use of the new fuel source to power equipment — such as tractors — that smaller operations often struggled to finance. With rapid technological advancements, smaller farms began to quickly consolidate as larger, more efficient farms acquired their land.
This trend has continued down the decades. According to a United States Department of Agriculture analysis from 2024, “large-scale” farms (defined as having an annual gross cash farm income of $1 million or more) make up 4.6% of farm shares, but account for over 50% of total domestic agricultural production.
The shift in agriculture markets has impacted the communities that once hosted wide networks of small farms. Small farms that once employed working hands to help with labor have been displaced by machinery that can do the work far more efficiently. Some rural communities that were once knit together by local agricultural trading partnerships are now reminiscent of the historic town of Pithole. In short, there are always communities that pay the price of technological advancement and the evolution of production strategies.
The Domino Effect: How Ag Consolidation Impacts Propane Marketers
As a supplier of agricultural customers, propane marketers and distributors would do well to take note of this history and to keep an eye on the way the industry continues to change.
As noted, the propane industry helped propel many of the changes that took place in the agriculture sector in the 1940s. The new fuel introduced innovative, effective ways of powering new technologies. The pairing of propane with cutting-edge technological advancements is a combination that has quite literally been at the heart of the propane industry since its inception.
Perhaps it was tempting for the blossoming oil industry to hold on to its dwindling control of the residential and industry lighting markets. However, if the gas industry clung too tightly to this market, they might have missed the new opportunities that were opening on the horizon in the automobile market.
A similar dynamic might be at play in current battles around electrification. Creative propane equipment manufacturers see electric solutions not as a threat to propane, but as new opportunities to innovate and expand propane into markets that were previously unimaginable.
For agriculture in particular, the consolidation of farms is bound to continue to change how propane distributors operate. Larger propane distributors will likely see a boost to their sales if they are attentive to agricultural markets, as smaller propane distributors will naturally struggle with the increased demands of larger farm operations and harder-to-manage supply patterns. This might further the trend of smaller propane distributors being acquired or consolidated.
On the other hand, the consolidation of smaller farms can be a catalyst to seek new market opportunities for smaller operations. Smaller propane distributors that are not open to consolidation can instead look to supplement their portfolio offerings by considering partnerships with propane equipment developers and autogas fleet manufacturers, two markets where local connections with organizations — such as school districts — often still play a significant role.
Additionally, smaller farms can often be found selling their produce at events like outdoor markets, which often serve as community hubs. Local propane distributors can partner with these community events to meet a variety of portable power needs, and in doing so, establish further connections with local producers.
There is no one-size-fits-all path going forward for propane in agriculture. While larger farms will likely continue to expand their reach, this does not have to spell out doom for smaller propane operations. What it does mean is that creativity will become a matter of necessity for propane companies looking to make up for lost agricultural customers. In the process, these smaller propane operations might just help pick up the pieces of communities like Pithole that have been left behind.
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Johnny Nickel is managing editor for Butane-Propane News.
