Why Farming Data, Not Soybeans, Might Be the Future by Al Hammond

In a remarkable event a few weeks ago, a majority of the Kent County Commissioners voted for zoning changes that would allow data centers in certain parts of the county. That may have been prescient, because data centers or “farms” are expanding rapidly and the Eastern Shore is potentially well-placed to benefit; at the least, it was a vote for strengthening Kent County’s economy. In addition, on May 7 a new Maryland law came into effect that gives data farms that locate in the state a tax incentive (forgiving sales and use taxes)—a change championed by Kent County’s Economic Development office. 

The coronavirus pandemic has accelerated an already strong trend for businesses of all kinds to move their computing, data storage, marketing, and transaction activities to “the cloud.” That means renting data storage and computing facilities in data farms—vast warehouses full of computers and data storage devices—instead of owning and maintaining the equipment themselves. Consumers are moving more activities on-line as well, working from home or chatting with friends and family with Zoom, streaming movies, and ordering from Amazon or Instacart. 

All that online activity means more data generation, more storage and data processing needed, more data farms. Yet by some estimates, only about 20 percent of the business activity that could move to the cloud has done so, meaning there is plenty of growth to come. Spending on cloud-based services in the U.S. is expected to jump from $70 billion last year to nearly $200 billion/year by 2023.

The largest providers of such cloud-based services—and the dominant owners of data farms—are Amazon, Microsoft, and Google, but there are lots of smaller providers as well. In particular, data farms at the “edge” of the global network—meaning close to users—are expanding rapidly, simply because consumers now expect a website to load within a couple of seconds and upcoming computing needs such as autonomous vehicles and the Internet of Things (smart devices of all kinds) also demand very rapid responses. Such edge data farms will typically be built within 100 miles of every major urban area. Kent County (and other parts of the Eastern Shore) are thus within range of Washington, D.C., Baltimore, Wilmington, and Philadelphia.

Because data farms use a lot of electric power to run the computers and data servers and for cooling, they tend to locate where low-cost power (and preferably renewable power) is available and land is not expensive. And that ties into another emerging opportunity for the Eastern Shore, which is the coming development of offshore wind farms. Offshore wind could potentially supply twice the generating capacity of all current U.S. power plants, so the resource is huge. And as wind turbines get larger, they become more efficient and the cost of power that they generate drops. New materials—such as carbon fiber blades—are twice as stiff as current fiberglass blades and weigh less, also lowering costs.

Current offshore turbines in Europe typically can generate as much as 8 megawatts, but the new, larger GE wind turbines identified for the proposed Maryland Skipjack wind farm will be rated at 12 megawatts each. Other manufacturers are designing still larger 15 megawatt turbines. So offshore wind power will be low cost. And if Kent County (or some other Eastern Shore county) was to follow the successful example of Easton Utilities and create its own utility that could contract in advance for some of that low-cost power, it would have all the ingredients needed to entice data farms, and could probably sell any excess power to other utilities at a profit.

Data farms are pristine if large structures. They consume a lot of electricity, and sometimes water for cooling, and they can emit an annoying humming sound, but they don’t generate a lot of vehicle traffic nor emit pollution. As such, they are likely ideal tenants of industrial land. Opposition to the zoning change in Kent County focused most heavily on concern that farmland would be converted to data center use, but the final language of the rezoning amendment does not appear to apply to farmland.

A typical data farm also would bring a dozen or so highly-paid, IT-savvy employees to a host county, and might attract related IT businesses as well. But their potentially most important addition to a county’s economy is the value of the land they occupy—which by definition becomes highly valuable industrial property and can be taxed as such: likely valued for tax purposes at $15,000/acre or more. Compare that with farmland—which, no matter how productive of soybeans or other crops, is valued for tax purposes at $500/acre or less under formulas set by the state of Maryland. Thus a 100-acre data farm would generate 30 times as much tax revenue as a 100-acre soybean farm.

No one is suggesting wholescale conversion of farmland to data centers—and the current rezoning does not allow it—but as Kent County Commissioner Tom Mason (himself a sophisticated, large-scale farmer) put it: “Agriculture is not the agriculture of 50 years ago. We need to generate more revenue.” Data farming may be one promising way to do so, if Eastern Shore counties can organize themselves to capture this novel 21st-century form of activity.  

Al Hammond was trained as a scientist (Stanford, Harvard) but became a distinguished science journalist, reporting for Science (a leading scientific journal) and many other technical and popular magazines and on a daily radio program for CBS. He subsequently founded and served as editor-in-chief for 4 national science-related publications as well as editor-in-chief for the United Nation’s bi-annual environmental report. More recently, he has written, edited, or contributed to many national assessments of scientific research for federal science agencies. Dr. Hammond makes his home in Chestertown on Maryland’s Eastern Shore.