CHALLENGES FACING BEGINNING FARMERS.

The dynamic winds of agriculture drive producers in divergent directions in a single-minded pursuit of growing opportunities. New crops – industrial hemp, low-linolenic oil soybeans, vineyards, and wind energy – beckon from the horizon. Old crops – corn and soybeans – test new geographic boundaries, and many farmers experiment with double-crop field peas and cover crops. Yet, the greatest challenge for agriculture today may be nurturing its fragile crop of beginning farmers.

Between 2007 and 2012, the number of beginning farmers identifying themselves as primary operators grew by about 1,000. Of principal operators on family operations, 18% started in the last 10 years, based on the 2012 Ag Census.

Barriers to entry are predictable. Access to capital for operating equipment and crop inputs poses significant headwinds. The average U.S. farm acre sells for over $4,100; it’s double that amount in Midwest states. Although record commodity prices have declined, elevated land values, cash rents, and crop inputs contribute to balance-sheet turbulence.

“Younger and beginning cash grain farmers are very vulnerable to the current downturn in the ag economy,” says Michael Boehlje, Purdue University ag economist. “If they’ve been aggressive in cash-renting land, they may run out of cash and liquidity, and confront debt service problems.”
Frayne Olson, North Dakota State University, is working with Ryan Larsen to run the financial numbers of a cross-section of North Dakota farmers. They’re using the results to update financial stress test models this fall for ag bankers.

“The impact is most heavy on those least able to weather the storm,” Olson says. “Those who are younger and have entered agriculture in the last several years have had to compete for land, and they tend to have a higher cost structure. They have less equity and financial reserves. They’re canaries in a coal mine.”

Buffeted by high-pressure zones
Only 7.8% of farmers are under 35 years old; 5.4% of primary operators fall into that category. Virtually all of today’s young farmers are closely tied to established producers. Yet, they often suffer losses or earn only small profits as they launch their businesses. Most rely on off-farm jobs or custom work to supplement their on-farm incomes.

A 2011 National Young Farmers Coalition (NYFC) survey reinforced that lack of capital remains a real barrier. Those who start farming without help from family are even more vulnerable to economic downdrafts. High-value crops or direct-marketed products are a good fit, such as natural meats, certified organic produce and grains, or grass-based milk.

In 1964, only 4% of farmers had a college degree. By 2011, 25% had a four-year college degree (compared with 28% for nonfarmers). In 2014, an NYFC survey of 700 young farmers revealed another less obvious, but very real barrier, to entry: student loans. Respondents reported an average student loan debt of $35,000. A total of 53% were farming but admitted difficulty in making student loan payments. Another 30% weren’t pursuing farming because their earnings wouldn’t cover student loan payments. BY CHERYL TEVIS.