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Farming – a boom or a bubble?
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Net U.S. farm income for 2011 surpassed $100 billion for the first time, according to USDA data. Record or near-record prices for livestock and grains this year fueled a 28 percent increase in net farm income and gives farmers and ranchers a lot of optimism for the coming year.
Excellent profits for most agricultural enterprises have helped heal a lot of financial wounds for the nation’s aging farmers, more than 60 percent of whom are over age 55. Those profits, and some government incentives, are also luring a new generation of farmers back to the land.
Agriculture Secretary Tom Vilsack hopes 100,000 new farmers will join the ranks in the next few years, and Congress has pushed proposals that would provide young farmers with improved access to USDA support and loan programs.
Young farmers are also seeing new opportunities and new markets that are attractive. For instance, more young farmers are focusing on raising organic crops and livestock that can be sold locally at a premium to conventional commodities. For many, especially those located near metropolitan areas, the income from locally raised organic crops can be much higher than what their neighbors receive for traditional crops.
Many young farmers also cite the farming lifestyle as a reason they choose to forego the 9 to 5 city life. Being self-employed, they say, is much more fulfilling.
An increasing number of farmers in America must be seen as a good trend. Sufficient food production is important to our national security and an increase in the number of Americans who are self-employed and self sufficient strengthens our society.
A legitimate question, however, is whether the current trend toward more farmers is a boom or a bubble.
Farming, as those farmers over age 55 know, carries a lot of risk. Weather extremes such as drought and floods can wipe out a year or more of work and income. Market volatility is also inherent in the business - $6 corn and $2 calves may not last forever.
But to a beginning farmer his biggest asset will also be his biggest worry – land values. U.S. farmland prices average $2,140 per acre, and prices in the Midwest and California can be two to four times that amount. At the average, a 160-acre farm will cost $342,000, and could range more than $1 million in certain locations. Such a heavy debt load would seem hard to service selling vegetables by the pickup load at a farmer’s market.
It could work – provided there is some off-farm income – as long as land holds its value. But if land values begin to slip we could see a lot of these new-age farmers exiting the business and heading back to the city.
Analysts already warn that production costs will be higher next year, with USDA expecting 20 percent increases for feed, fuel and fertilizer.
Still, farming has been one of the bright spots for America’s economy over the last couple of years, and the outlook for the near-term is bright. There hasn’t been a better time to be in agriculture and beginning farmers hope that holds true for a while longer.
Comments (9)
Leave a commentJoel Heinzeroth
Report AbuseAnother interesting program that is out there that I wish would get more attention by other states is Nebraska’s “Combat Boots to Cowboy Boots Program” (http://ncta.unl.edu/combatcowboyboots).
States with large agriculture economics are missing a huge opportunity to lure their young people back to their home states after serving their country.
I am currently five years away from retiring after a 20-year career in the Army. For sure, it has been tough with numerous deployments, but it has also given this Iowa “farmboy” a chance to realize his lifelong dream to carry on his family’s agriculture tradition. When my father passed away in a farm accident in the 1990’s there was no way I could hope to buy the farm (he was barely making it paying the interest on the bank notes). However by serving my country I have been able to provide for my family now, but also allowed me to buy land early in my life (so I can pay it off). When I retire, I will have retirement income and health benefits that will support my family and allow us to focus our future family ranching operation into being profitable, paid off, and ready for the next generation to take over (if they so choose).
No, I am not an Army recruiter, but if a family-owned agriculture operation is trying to figure out how to pass on the operation to the next generation, they should consider having their children look at serving their country. While of course the military is not for everyone (I will be the first to say that), it is an avenue to give a child money for education, save money, and see the world (all the while serving this great nation).
Joel Heinzeroth
Report AbuseAnother interesting program that is out there that I wish would get more attention by other states is Nebraska’s “Combat Boots to Cowboy Boots Program” (http://ncta.unl.edu/combatcowboyboots).
States with large agriculture economics are missing a huge opportunity to lure their young people back to their home states after serving their country.
I am currently five years away from retiring after a 20-year career in the Army. For sure, it has been tough with numerous deployments, but it has also given this Iowa “farmboy” a chance to realize his lifelong dream to carry on his family’s agriculture tradition. When my father passed away in a farm accident in the 1990’s there was no way I could hope to buy the farm (he was barely making it paying the interest on the bank notes). However by serving my country I have been able to provide for my family now, but also allowed me to buy land early in my life (so I can pay it off). When I retire, I will have retirement income and health benefits that will support my family and allow us to focus our future family ranching operation into being profitable, paid off, and ready for the next generation to take over (if they so choose).
No, I am not an Army recruiter, but if a family-owned agriculture operation is trying to figure out how to pass on the operation to the next generation, they should consider having their children look at serving their country. While of course the military is not for everyone (I will be the first to say that), it is an avenue to give a child money for education, save money, and see the world (all the while serving this great nation).
Dr. Theodore G. Sherbeck, Soil Scientist
Report Abuseorganic product production is PHARSE, had U S Agriculture followed this dogma since the World War II times billions of people would be starving today. Organic perpetrators are nothing but parasites feeding off of unsuspecting parasites.
Cindy Rich
Report AbuseIf farmers and ranchers can be as productive or in some cases more productive using organic and sustainable agricultural practices, then what on earth can be wrong with that. Not using fossil fuels or petroleum based fertilizers reduces costs of production for most people allowing for the opportunity to have improved margins. Seeing that there are many more acres of land in the US that could be more productive, I do not see any reason to be concerned about not having the land base to feed ourselves. If family farmers and ranchers want to be profitable they need to reduce inputs and or learn how to ask for a fair price for what they produce. This includes passing the cost of land ownership on to the consumers!
Lois
Report AbuseThe comment by Cindy Rich that farmers should lower the cost of inputs and ask more for their products is an example of someone who has no concept of the realities of agriculture in this country. An overreaching government that tries to control every aspect of food production is one of the biggest problems. My children learned to drive at a very early age and were in the fields running haying equipment by age of ten. On horseback before they could saddle a horse, and good help with cattle. Now the Department of Labor has proposed a rule limiting the work of anyone under the age of 16 to only working for parents. What a blessing it would be if more young people being raised in cities could have the opportunity to work on farms. That is just one example of rules/regulations being written to put an end to agriculture in this country.
Ron Treatise
Report AbuseDr. Sherbeck said "organic product production is PHARSE, had U S Agriculture followed this dogma since the World War II times billions of people would be starving today. Organic perpetrators are nothing but parasites feeding off of unsuspecting parasites."
We dump 1.3 million tons per year of toxic chemicals on our lands to kill virtually everything except the desired product. So, if you are studying non-organic production, you are studying dirt, not soil. I'm not sure what "pharse" is. I do know what dogma is: The established belief or doctrine held by a religion, or a particular group or organization. The production of organic products is not dogma, anymore than worshipping a chosen god is dogma. A religion’s tenets may be dogma, and a religious leader may be dogmatic, but an act cannot be "dogma". And the logic behind organic food production is anything but dogma. The last part of this rant is semantically absurd, so let’s review the intent, not the form.
Organics did feed the world before WWII, and it could today.
This practice maintains certain principles: biodiversity, ecological balance, sustainability, natural plant fertilization, natural pest management, and soil integrity. We cannot feed the world in a sustainable manner by killing off everything except what we sell in the marketplace. Human parasites, it would seem, are those who slowly poison their customers with toxic chemicals, and who use up scarce petroleum products and strip the land of all life and nutrients in order to make a short-term profit, then move on when nothing else will grow on it.
JJM
Report AbuseSoil Scientist - Your chemical and Genetic Modification methods continue to kill our soil and poison our foods. You should know that healthy soil needs more than what chemical fertilizers provide. An excellant example is my yard which for 5 years had been continuously dying off while being responsibly fertilized, even sections of fresh sod would die. After a regimen of composted manure and soil food (not grass fertilizer) my yard has recovered in a 2 year span and survived this past year's drought with minimal watering.
I fear the chemicals fed to the plants and the Genetic Modification producing unknown consequences. I would rather trust in the gifts that God and Mother Earth have provided us with with thousands of years of healthy human consumption.
Ben
Report AbuseI am the third generation farming the same farms my grandpa started farming since 1960. If the commercial fertilizers are poisoning the soil, why are we seeing new record yields the last few years? We are diligent with soil sampling methods to maintain a balanced nutrient profile, and replace what we used, that's how. Farming is more of a science that most people understand. We have a few neighbors that are practicing the organic system. If America had to sustain itself on their production, we would be paying a lot more for food as their yield isn't half of what we get. Worse than anything is the amount of diesel fuel they burn. They make twelve passes across the field when we only make five. Also, by the time they get the field prepped to plant, the soil has no residue left to help hold the soil at all. When the big spring rains come, their soil washes down the hills, resulting in catostrofic damage to the land, which can't be repaired. Modern farming practices are some of the most sustainable we have ever done. My plan is to be farming the same farms for years to come, and I have the fourth generation on its way up. My hope is that he will also reap the rewards of the land, the same as I have.
Joe
Report AbuseAg is cranking. Food is the highest price that we have seen in 60 years. We are throwing high priced protein in the landfill at an alarming rate in the form of horses, cats and dogs. It's not socially exceptable but in the age of being green and recycling only a living feeling being gets treated like trash. Green waste, plastics, aluminum, e-waste they all have there places to be recycled. But not animals that could have a huge value in the newly rejuvenated ag sector. Why is that.