How is the Cost of Farmland Affecting Beginning Farmers?

Having spent several years now pouring over real estate listings in search of my own forever farm, I have become painfully aware of the cost of farmland. Farmland prices are rising, and good land for farming is becoming increasingly scarce. This has serious implications for the future of the nation’s farm economy and farm system, but also for America’s agricultural landscape. As the older generation of farmers begins to wane, what will happen to their farmland? How will new farmers access land to grow the food that feeds our country? And how can we preserve farmland for future generations?

Barriers to farming

how is the cost of farmland affecting beginning farmersAccording to a 2009 report from the USDA’s Economic Research Service, beginning farmers face 2 primary obstacles:

  • High start-up costs
  • Lack of available land for purchase/rent

The study also found that beginning farmers tend to earn less income from their farms. They have more off-farm income and are less likely to rent farmland than established farmers. This is because rental agreements are inherently less secure than land-ownership, discouraging investment on the part of the farmer.

A 2011 report on beginning farmers “Building a Future with Farmers” by the National Young Farmers’ Coalition came up with similar results: 78% of respondants rated lack of capital as the biggest obstacle. 68% cited finding affordable land to purchase or landowners willing to make long-term agreements. 40% reported access to credit, including small operating loans.

Respondants found these barriers to be more challenging than business planning or marketing skills, finding good education and training.

The researchers from the National Young Farmers’ Coalition interviewed representatives from 30 different organizations around the country who work with farmers and found that the one issue raised by virtually everyone was access to land. The representatives interviewed pointed to many resources to help with financing and credit, farm production, and business and marketing skills, but few actual resources exist to help new farmers gain access to land.

Note: For more on the challenges beginning farmers face, check out this article from Choices magazine.

Rising farmland prices

rowcover at johnnys selected seeds albion

Crop field at Johnny’s Selected Seeds’ research farm in Albion, Maine.

Studies show that most farmers acquire land by purchasing from a non-relative. Therefore, trends in the farmland market are critical to entry opportunities and the cost of farmland. This explains why beginning farmers are more likely to not own land.

Between 2000 and 2008 farmland values have doubled in the United States. Those values are still rising today, driven by foreign investors and development pressures.

According the the USDA’s Economic Research Service, the average farmland real estate value in  2010 was $2,140 per acre, and in 2017 the price per acre for farmland is $2,728. But the agricultural value of land is dependent upon the quality of it’s soil─not it’s development possibilities─and how much income it can produce for farmers.

Due to historical program eligibility conditions, land used for cash grains such as soybean, corn, and rice, are more likely to have an agricultural base than other types of farmland uses (vegetables, fruit, nuts, livestock, etc.). Owning farmland with a base encourages established farmers to continue farming.

The ERS reports that since 2009, US farmland values have been supported by relatively strong farm earnings fueled by record high commodity prices. When coupled with historically low interest rates, the market is able to support higher land values. This is a boon for those exiting the industry, but just the opposite for those trying to buy in.

Lost farmland

old farmland and barn with wild flowers

1.3 million acres of land once dedicated to the cultivation of food, has either been lost to the Maine woods or to development.

In the 1800’s Maine had 6.5 million acres of open farmland. Everybody farmed then. Maine was such a vast state with homesteads so spread out across the country side that residents had no choice but to grow their own food. Since then a total of 1.3 million (or 22.4%) acres of land once dedicated to the cultivation of food has either been lost to the Maine woods or to development.

The phenomenon has accelerated in recent years. Economists detail how much more valuable that farmland would be if it were rezoned for development. Large tracts of land are being bought up and broken into smaller lots for housing. This has a serious impact on the farming industry,  leaving beginning farmers fewer options when it comes to finding farmland. It also makes securing that land much more difficult.

Additionally, the farmland retirement program, the Conservation Reserve Program (CRP), encourages established farmers with interest in retiring to place their land in the CRP, rather than exiting farming and selling or renting their land to other producers.

Fewer new farmers

Farmers between the ages of 65 and 74 represent the fastest growing sector of the farming population. According to the USDA’s 2012 Agricultural Census the average age of principal farm operators is 58.3 years old. There are twice as many farmers who are 75 and older, as there are farmers who are 34 and younger.

There can be no doubt that we need the new generation of farmers who are eager to participate in the local food movement. Yet between 1982 and 2007, the percentage of principal operators with fewer than 10 years’ experience dropped from 38% to 26%. The percentage of young farmers fell also, from 16% to 5%, with data from the 2012 Census confirming the continuation of that downward trend. Principal operators with fewer than 10 years’ experience now accounts for 22% of the total, while young farmers represent less than 6%.

The decline of beginning farmers and ranchers has been so sharp that in 2010 US Secretary of Agriculture, Tom Vilsack urged Congress to consider adding a policy goal of 100,000 new farmers.

Addressing farmland access

In 2007, to explore and address the concerns of farmland access, succession, tenure, and stewardship (FarmLASTS), a national multi-year project was initiated by a collaboration between Land for Good and the University of Vermont. According to the report compiled by FarmLASTS, only 3% of farmland buyers are new farmers. Socially disadvantaged farmers face additional challenges, including cultural and language barriers.

farmers markets increase oppportunities for beginning farmers sign

Farmers’ markets increase opportunities for beginning farmers.

How will the decrease in beginning farmers affect the country? Based on policies, programs, and statements various policy makers have revealed they believe it matters to the country’s long-term food security. Some policy makers have even expressed the hope that beginning farmers will play a role in revitalizing rural communities, halting the long-term population losses the United States is suffering in those rural areas.

However, until we come up with some kind of incentive to encourage the older generation of farmers to work with beginning farmers─to ensure the stewardship of existing farmlands─the current trend is likely to continue.

Certainly it can be a harrowing experience for non-farmer landowners to sell to farmers because of the difference in the cost of farmland verses it’s value for potential development. Not all landowners are in a position to sell their property for anything less than top dollar, yet those who can afford to want to do just that.

Consumers are waking up to the health risks associated with processed foods. They’re realizing the environmental impacts of an industrialized farming system. People are turning to local foods, and farmers’ markets are on the rise across the US. In 1994 there were 1,755 farmers’ markets throughout the States; in 2014 that number had risen to 8,268─an increase of 471% over a 20-year time span.

The growth of local foods offers opportunity for beginning farmers, with farmers’ markets serving as an incubator for new farmers. Local farmers’ markets allow beginning farmers to grow their business and become a part of their community.

Agriculture needs community

The fact remains that fewer beginning farmers are coming into the industry, and not all of them will endure the long hard struggle to farm ownership. Innovative programs such as the Maine Farmland Trust’s “Forever Farms” project, which uses agricultural easements to preserve fertile land for farming, can help to stem the tide of farmland lost. Unfortunately it’s going to take more than a few organizations to rebuild and maintain a farming industry in rural America. Agriculture needs the support of the community. Not only is this industry dependent upon consumer support and the participation of local townsfolk, it thrives on it and in return feeds our country in more ways than one.

The number of beginning farmers entering agriculture is directly related to the cost of farmland and the obstacles new farmers face. At this time there are many questions left unanswered. Until policy is made to bridge the gap─to encourage more people to sell their lands as farmland, and to increase access to financing─it will continue to be a struggle for beginning farmers looking to get into the business.

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