- "Farming for the Future: Beginning Farmers Struggle to
Access and Retain Land"
- "Beginning Farm Numbers Drop"
- "Financial Demands Lock Many Producers Out of Farming
Sector"
- "Additional Obstacles Prevent Young Farmers From
Entering Fields"
- "Young Farmers Seek Alternative Options"
- "Investing in the Future: Retiring Farmers Pass on
Their Land, Stewardship"
_________________________________________
FARMING FOR THE FUTURE: BEGINNING FARMERS STRUGGLE TO
ACCESS AND RETAIN LAND
Fewer and fewer young persons are considering farming as
a career each year. Many are discouraged after watching
their parents struggle through years of financial
trouble. Others lack capital, access to resources, or
information to begin farming on their own in what
remains a very expensive and risky business. In
addition, the changing structure of the livestock
industry coupled with complex new farm and environmental
policies have prevented many potential farmers from
entering the fields. According to the 1992 U.S. Census,
there are now fewer farmers under the age of 35 and more
farmers over the age of 65 than there have ever been
since the Census Bureau began tracking farmers' age in
1910. This trend toward fewer farmers and larger farms,
which has already had a devastating effect on rural
communities, will continue unless the economic,
political and social obstacles facing potential young
farmers are overcome.
_________________________________________
BEGINNING FARM NUMBERS DROP
Today's potential young farmers are interested in
starting life on the farm or continuing the tradition of
stewardship carried on by their parents. Many have no
previous farming experience, but have made the
commitment to education and hardwork in the fields in
pursuit of rural life's rich rewards. Other beginning
producers, who have grown up on the farm or in a rural
community, have a strong sense of responsibility to
carry on the important role of food production and a way
of life that their families have spent generations
building. Young farmers, partly because of their need
to cut costs, are much more receptive to new ideas about
ways to farm with fewer chemicals, and are generally
more sensitive to conservation issues, says SUCCESSFUL
FARMING's Dan Looker.
A beginning farmer is defined by the government as
someone who has been farming independently for up to 10
years. This group of people, like the farming
population as a whole, has been on the decline over the
past two decades.
There are one million fewer farmers today compared with
25 years ago. During that same period, the number of
farmers under the age of 35 fell from 217,000 in 1974-
78 to 115,000 by 1987. At the height of the farm
financial crisis in 1985, the USDA estimated that the
average annual entry into farming fell 25 percent.
"Most of the decline in entry -- 58 percent -- occurred
among people under 35 years of age," USDA said in its
1993 report "Farm Finance: Number of New Farmers Is
Declining."
In fact, there are now fewer farmers in America, only
11 percent, under the age of 35 than ever recorded by
the USDA. Among minority farmers, the lack of new
producers is even more startling. Fewer than one percent
of all African American farmers are under the age of 25.
Conversely, the number of farmers aged 65 and older has
increased. In fact, there are now two farmers over the
age of 65 for every one farmer under 35. By comparison,
only three percent of the civilian non-farm labor force
is over the age of 65.
_________________________________________
FINANCIAL DEMANDS LOCK MANY BEGINNING PRODUCERS OUT OF
FARMING SECTOR
"The cost of buying enough land and machinery to support
a family by growing only corn and soybeans is now about
$1 million. Even most Americans at retirement don't
have that." -- Dan Looker, Farmers for the Future
The primary barriers that beginning farmers struggle to
overcome are financial related. The enormous amount of
capital required to begin farming and the difficulties
in accessing adequate credit have prevented many
potential young farmers from entering or remaining in
the fields.
Although the 1996 Farm Bill makes federal loans and land
inventory available to beginning farmers, most
commercial banks still require up to a 30 percent down
payment, a minimum 15 percent cash-flow margin over
expenses, and will typically loan out only 50 percent of
collateral value to finance farm operating expenses,
according to the Omaha Farm Credit Bank.
These credit terms have made it increasingly difficult
for a young person to afford entry into farming or to
remain on their land once it has been acquired.
August Hauschild, for example, who grew up in Minnesota
helping his father farm land that has been in their
family since 1900, will not take over the farm when his
parents retire. "Having enough modern machinery,
milking supplies, equipment, buildings and other
capital, not to mention human capital, requires a
significant amount of loans," Hauschild explains. "If I
were to start farming on my own, I feel that I would be
working the rest of my life just to dig myself out of a
financial hole." Many young rural residents, like
Hauschild, who are discouraged from farming are instead
working non-farm jobs with agribusiness or manufacturing
companies. Others are leaving their communities
altogether.
In addition, the high level of weather-related risk
coupled with depressed real farm income has made farming
a financially unattractive business. This has
discouraged many potential young farmers from beginning
a career on the farm, and has forced others just
starting out to quit or seek additional help. Jim
Hendrix and his wife, for example, who are both in their
early thirties, left their dairy operation in North
Carolina because of financial difficulties. After
struggling for six years to fulfill a lifetime dream,
the Hendrix's knew that financial uncertainties would
soon force them to quit the business. "After six years
of dairy farming we were right back to square one
financially -- we couldn't seem to get ahead," Hendrix
recalls. "We had a couple of bad crop years, had to
borrow an operating loan, and just weren't able to make
it given market prices for milk and crops."
_________________________________________
ADDITIONAL OBSTACLES PREVENT YOUNG FARMERS FROM ENTERING
FIELDS
There are a range of additional economic, social and
political factors discouraging young people from
entering farming. For example, lack of parental
support; alternative educational and occupational
opportunities; and shrinking rural birth rates all
reduce the traditional pool of potential new farmers.
In addition there are two other land-related factors
preventing many young people from fulfilling their plans
to farm.
Joy Johnson, of the Center for Rural Affairs, says the
issue of land accessibility is an important one.
"Older, experienced farmers, who are encouraged to
expand their operations to gain economic benefits, are
able to acquire land much more easily than beginning
farmers," Johnson says. "Likewise, small-size tracts of
land are becoming increasingly rare -- beginning farmers
need the chance to start small and grow responsibly."
The average farm size has increased from 355 acres to
470 acres over the past 25 years.
Pennsylvania farmer Marion Bowlan, who also coordinates
the state's Farm Link program, says skyrocketing land
assessments for tax purposes are driving existing
farmers out of business and discouraging new farmers
from taking their place. "In areas of Southeastern
Pennsylvania where a lot of development is occurring,
taxes have jumped 150 percent this year alone," says
Bowlan. "Most farmers can't afford these kinds of tax
hikes and are therefore selling out to the developers
who drove prices up in the first place. Considering that
nearly one-fourth of our state's 44,000 farmers are over
the age of 65, we are very concerned about this
problem."
Finally, the bias and complexity of farm programs and
environmental regulations are also deterring many
potential farmers from farming. Federal farm programs
have been historically targeted toward larger farms, and
consequently have locked out many beginning farmers, who
generally begin their career in farming with a modest-
size, affordable farm.
_________________________________________
YOUNG FARMERS SEEK ALTERNATIVE OPTIONS
In an effort to overcome financial and other farming
obstacles, many beginning livestock producers are
entering into contractual arrangements with processors
or "integrators" who guarantee a seasonal price and the
ability to secure a loan for the farmer at his or her
local bank. Although contract production appears to be
an attractive way for young people to enter the
agriculture sector, it requires hundreds of thousands of
dollars in start-up capital, and because of contract
terms, offers little long-term financial return or
opportunity for the new farmers to control and manage
their own operation. The long-term potential income
return for farmers is smaller under contractual
arrangements than for independent growers, according to
Successful Farming magazine's Dan Looker. "The changing
economic structure of the hog industry and livestock
markets may be the darkest cloud on the horizon for
beginning farmers who raise cattle or hogs," writes
Looker.
Other young farmers who start out by renting land,
sometimes never have the opportunity to purchase
farmland of their own because of low profit margins.
The combination of rising input costs and declining real
farm prices over the past several decades have made it
close to impossible for most farmers to accumulate
savings with which to buy their own farm. Consequently,
many producers become frustrated after years of renting
and leave the fields for good.
Although these alternative options, such as contract
production or renting land, may help young people begin
farming, they do not provide opportunities in the long-
run for a future on the land.
_________________________________________
INVESTING IN THE FUTURE: RETIRING FARMERS PASS ON THEIR
LAND, STEWARDSHIP
Over the next several years, thousands of acres of
farmland will change hands as America's older generation
of producers retire. The Center for Rural Affairs,
located in Walthill, Nebraska, and other farm groups are
working to ensure that young people have the opportunity
to access and farm this land.
The Center developed a program in 1990 to help retiring
farmers and young, hopeful farmers meet their mutual
needs and preserve the state's family farms. The
program, called Land-Link, operates as a database of
retiring farmers and potential young farmers looking for
an opportunity to gradually purchase or run a successful
farming operation. The Center maintains the database,
helps counsel potential farm link participants to draw
up work and land transfer terms, produces a newsletter
to track the progress of land-link couples, and
organizes regular workshops for groups assisting
beginning and retiring farmers.
The Center's Nancy Thompson says the match ideally
results in transfer of the retiring farmers' assets to
the beginning farm families. "Generally, the transfer
begins with livestock and moves to machinery and land,"
explains Thompson. "But this type of arrangement is
rare. The norm is for retiring farmers, interested in
seeing their operation carried on, to rent their land to
a beginning farmer."
Retiring farmers who design a gradual transfer of assets
to the beginning farmer, are interested in more than a
quick retirement plan. They are concerned about the
long-term preservation of their land and their family
business; most are willing to help out young farmers
with human and financial capital. The retiring farmer
gains some assurance that his/her lifetime of work will
be carried on to the next generation and the opportunity
to avoid some of the capital gains tax that he or she
would face if selling all of the farm at once. The young
farmer gains a chance to acquire capital or even a farm
without taking on a lot commercial debt and a better
chance of remaining on the land in the future.
Jim Hendrix, for example, who quit his dairy operation
in North Carolina and moved to Nebraska after finding a
match with retiring organic producer Del Ackerman
through the Center's Land Link program. "I was matched
up with Del three years ago," Hendrix says. "I have
gradually worked out a plan with Del, under which I
provide most of the labor and he supplies the capital,
land and equipment. I'm now renting some land of my own
and doing better financially than I had ever hoped. I
wish I had started farming with Del straight out of high
school."
The Center currently has more than 30 retiring farmers
and between 100-125 beginning farmers in its database
awaiting a match. There have been 76 matches made by
the Center since the program's inception.
The Land-Link program has become a model for matching
programs in other states -- like the Pennsylvania Farm
Link program. "Farm Link is a wonderful idea," says
dairy farmer Kenneth Yoder. "Our family has been
working with Farm Link for one year to find someone who
could take over our dairy operation if our kids decide
that they don't want to farm." Yoder, who is ready to
retire, says he and his wife would not have been able to
make contact with new farmers without the help of Farm
Link. "We live very close to town, so I could sell off
our land and retire any time I want. But we feel very
strongly about seeing this land stay in farming -- We
just want to find someone who will maintain the dairy
farm we've spent the last 35 years creating."
Seventeen states across the United States have created
matching programs. Some of the programs provide state-
wide services, while others focus on a particular county
or region. Every year, matching program managers gather
at the National Family Farm and Ranch Transition Network
to discuss on-going beginning farmer obstacles and ways
to broaden matching programs.
These programs, while a good start, cannot alone
overcome the economic obstacles preventing young people
from getting started in farming. Federal and state
governments as well as local farm groups and Extension
agents must commit themselves to supporting the next
generation of family farmers.
_________________________________________
RESOURCES
Farmers For the Future, Dan Looker. (1996). Meredith
Corporation publishing. 182 pages. $19.95.
"Farm Finance: Number of New Farmers Is Declining,"
General Accounting Office, May 1993. Free. (202) 512-
6000.
"The Beginning Farmer," Newsletter of the Center for
Rural Affairs' Beginning Farmers Sustainable Agriculture
Project. Monthly. Free. Contact the Center for Rural
Affairs' office in Hartington, NE, (402) 254-6893.
_________________________________________
EVENTS
June 9 CBS Sunday Morning television show will feature
the Center for Rural Affairs' Land Link program. Look
for the segment called "Postcards From Nebraska" on your
local T.V. station.
July 14-16 National Family Farm and Ranch Transition
Network Annual Meeting, Madison, Wisconsin. Contact Joy
Johnson at the Center for Rural Affairs for more
information, (402) 846-5428.
_________________________________________
Farm Aid News is produced by the Institute for
Agriculture and Trade Policy for Farm Aid. Editors
Harry Smith and Gigi DiGiacomo. We encourage the
reproduction of Farm Aid News & Views. Comments and
suggestions welcome. Farm Aid, (617)354-2922. Fax:
(617) 354-6992. Email: Farmaid1@aol.com. For more
information on agricultural publications contact IATP,
(612) 379-5980. Fax: (612) 379-5982. Email: gdigiacomo
@iatp.org.