Posted on Wed, Oct. 12, 2011
last updated: October 12, 2011 04:17:53 PM
WASHINGTON — The average age of the American farmer has been rising for decades and now is edging toward 60, as rural youth traded work in soil for work in offices. But even as interest in operating farms has returned, the next generation of food producers faces severe economic hurdles to breaking ground.
High crop prices have pushed land values up 42 percent since 2007, and the economic downturn has limited the availability of credit.
Without significant help from family, neighbors or the government, it's nearly impossible to begin farming, according to Brandon Riffey, U.S. Department of Agriculture farm loan officer for Pratt County, Kan.
The government has tried to encourage younger people to participate in agriculture by easing access to credit. The USDA provides low-interest loans — currently 1.75 percent on operational costs and 4.25 percent on land purchases — to new farmers through a special program.
Even now, with farmers eligible for up to $600,000 in government loans, the cost of doing business is so high, it "won't do much more than get your foot in the door," Riffey said.
Lawmakers are expected to introduce a bill in Congress this week that would lower eligibility standards and funding for the Beginning Farmers and Ranchers Loans program.
"We think the farm bill should address the critical problem of the aging of American agriculture and the lack of economic opportunity to get into farming for younger people," said Ferd Hoefner, the policy director for the National Sustainable Agriculture Coalition.
Traditionally, bills such as this one, known as the Beginning Farmer and Rancher Opportunity Act of 2011, aren't intended to pass on their own. Instead, the language would be included in an overall farm bill, which is expected to wind its way through Congress this year and next.
That means new farmers wouldn't benefit from the legislation until 2013, when the new farm measure is expected to take effect.
So far the Beginning Farmers and Ranchers Loans program has been popular in Kansas, with the number of loans approved each year rising from 213 in 2002 to 563 in 2011. But now demand is outstripping available funds. As of Sept. 30, 30 loans totaling $3.4 million are waiting for money to become available.
"We were doing pretty good four or five years ago, but we are getting more of a waiting list as we go along now," Riffey said.
Last November, Brendon Wheelock, 25, of Medicine Lodge, Kan., was approved for a $550,000 loan to expand his farm and ranching operation: $225,000 through the USDA's beginning farmers program and the remainder from a private bank.
But when Wheelock went to purchase the land, his government loans were put on a waiting list and he had to get an additional private loan at an interest rate nearly twice that of the government's rate. According to Wheelock, when he finally was removed from the waitlist in May, he'd accrued about $8,000 in additional interest he wouldn't have had to pay had the government loan been ready on time.
Even if the beginning farmer program is expanded with the next farm bill, it doesn't address an economic reality: High land and crop prices may make farming profitable for an established farmer with no debt, but they make it barely profitable for incoming farmers taking on significant financial risk.
"The price of land is, probably in many cases, beyond what it's worth in terms of future returns for just farming itself," said David Lambert, the head of Kansas State University's department of agricultural economics.
Instead, new farmers who also are paying off debt often must find financial support beyond the fruits of their toil in the fields.
Trent Friesen, 38, of Greensburg, Kan., started farming full-time five years ago. Despite farming 1,700 acres of wheat and soybeans, Friesen also hauls grain and livestock for his neighbors and works as a hired farmhand.
"At least 40 percent of my time is still trucking and working for other people," Friesen said. "It would be tough to support myself without additional income."
Friesen isn't alone.
"Most of our customers that come in, especially the young beginning guys, have to have some other source of non-farm income," Riffey said. "You have to be a pretty significant-sized farm anymore to be able to feed your family from just the income coming off that farm."
Looking ahead, Friesen and other Kansas farmers hope to see the program expanded, because as Friesen noted, without it "I wouldn't own any land, and I'd be in quite a bit of trouble if I'd still be in business."
(The Medill News Service is a Washington program of the Medill School of Journalism at Northwestern University.)
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