Wanted: Young farmers and ranchers
By Doug Rich
There is something that agriculture needs just as much as drought-tolerant corn or auto steering in tractors: It needs young farmers and ranchers. The average age of farmers in the U.S. is 57 and that number is not going down
"We are losing rural population and when we lose population we are losing a huge number of kids from 0 to 18 years of age," said Weldon Sleight, Nebraska College of Technical Agriculture. "Cherry County, Neb., the biggest cow-calf county in the U.S., lost 416 students in 9 years--that is like losing a good-sized high school."
It is difficult to get started in farming or ranching even if a person is lucky enough to inherit the land and equipment. But, what would it cost to start an average-sized diversified farm from scratch?
According to USDA statistics, the average farm in the U.S. is 414 acres and the average beef cowherd has 44 cows. The average USDA market value for land is $2,140 and the average price for a good beef cow is $1,000. That puts the price tag for this average-sized farm at $885,968 for land and $44,000 for the cows. The grand total is $929,968.
Ron Plain, Extension economist at the University of Missouri, said as a general rule you should figure 20 percent of land value for equipment. For our fictional average farm that would amount to $177,000, which pushes the total cost to $1,106,968.
That is a big price tag and the sad part is that a 414-acre farm is probably not big enough to be profitable unless there is some type of intensive high-value cropping or livestock production.
"That is not enough land to be a full-time farmer unless you are raising a lot of hogs or birds," Plain said.
A profitable size for a farm might be around 2,000 acres. This pushes the total cost for land and equipment to $6.4 million. Plain said equipment is the killer in a grain operation. Combines do not make money sitting in the machine shed 48 weeks out of the year.
"This could be at a size of farm where you might not need to depend on off-farm income, but it sure would be nice if your wife had a job with health benefits," Plain said.
No doubt it is hard to get started in farming and ranching, but it is not impossible. Sleight and the NCTA have developed two programs for beginning farmers. The 100 Beef Cow Ownership Advantage Program and the 100 Acre Farm Advantage Program were started two years ago to help young people become farm and ranch owners.
"We have determined that the way to grow these young people is to allow them to own something," Sleight said. "If they are always hired hands, hired hands will always leave for the next highest wage. If they own something they will stay."
Keeping these young people on the farm or ranch is key to the survival of rural communities. These communities are dying, and Sleight believes we absolutely need to do something to put farm families back on these farms and ranches.
The 100 Beef Cow Ownership Advantage Program matches a young person with a retiring rancher. The young person uses a low interest loan from the USDA Farm Services Agency, which allows the beginning rancher to borrow up to $300,000 at a 2-percent interest rate. The beginning rancher can use that money to buy cows and equipment.
There is no elaborate contract or partnership. The agreement says if the retiring rancher will allow the beginning rancher to have his cows in the herd, the beginning rancher will take care of the entire herd. Over the next 10 to 15 years the beginning rancher continues to hold back replacement heifers, building his herd. Eventually he will have enough cattle to use as collateral on a loan from a commercial bank to buy his own ranch.
"That 100 cows would not make a living in a normal situation but it can in this case because the owner gives the young person an opportunity for low-cost maintenance of his cow herd," Sleight said.
NCTA faculty have developed a similar program for young farmers called the 100 Acre Farm Advantage Program. It also depends on a young farmer finding an older farmer to be his partner. The young farmer applies for the $300,000 loan from FSA and uses it to buy equipment, rent additional ground, or for operating expenses. He works for that farmer for three years with the goal of saving $25,000. The young farmer uses that $25,000 as 5-percent down on another USDA beginning farmer loan for $250,000 at 1.5 percent interest. If he can find a commercial bank to loan him another $250,000 then FSA will guarantee the bank first mortgage and cover 90 percent of the loan.
"The bank will never lose money on a loan like that," Sleight said.
It can be done
Garrett Dwyer, a young rancher, used the 100-cow program to get started when he returned from a stint in the Marines. Dwyer served in the Marines from 2004 to 2008, and just two weeks after leaving the Marines he was in class at NCTA enrolled in their 100-cow program.
Dwyer did not wait to graduate from NCTA but applied for the FSA loan during his first year at NCTA.
"I wanted to get the ball rolling," Dwyer said.
The loan was finalized in July 2009 and Dwyer graduated from the program in 2010. He used the loan to buy 85 heifers, 45 cows, four bulls, and some new equipment. Dwyer is lucky that he was able to come back to the family ranch near Bartlett, Neb., and partner with his father.
Sleight said bankers would ask beginning farmers and ranchers three questions when they come looking for their first loan: Do you understand beef production? Do you understand the business of beef production? And do you have any collateral? The 100-cow and 100-acre programs allow these young farmers and ranchers to give positive answers to all three questions.
"These programs provide a very unobtrusive way to start someone down the road to ownership, but it does not work without an older rancher to help out," Sleight said.
No doubt it is difficult if not impossible for young farmers and ranchers to get started from scratch. But programs like those developed at NCTA can make their dreams come true. Although these programs were developed in Nebraska, they are models that be repeated successfully anywhere.
Doug Rich can be reached by phone at 785-749-5304 or by email at email@example.com.