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USDA publication highlights challenges of beginning farmers

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WILLMAR — The following three numbers highlight a long-term disturbing trend that has troubled America’s agricultural industry for years: 39, 45 and 58. What do those numbers represent, and why are they so disturbing? They represent a continual and rapid increase in the average age of America’s farmers over the last 60 years.

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By Wes Nelson

USDA Farm Service Agency

WILLMAR — The following three numbers highlight a long-term disturbing trend that has troubled America’s agricultural industry for years: 39, 45 and 58. What do those numbers represent, and why are they so disturbing? They represent a continual and rapid increase in the average age of America’s farmers over the last 60 years.

According to the data gathered from the U.S. Department of Agriculture’s Census of Agriculture, the average age of an American farmer was 39 years back in 1945. By 1974, the average age had increased to 45. And according to the latest census data, taken in 2007, the average age had reached 58 years.

Obviously, American agriculture needs an infusion of young men and women to enter what is one of our nation’s most vital occupations — producing the food, fiber and fuel that millions of Americans, and others around the globe, rely on daily.

A recent publication released by USDA’s Economic Research Service provides us with some interesting insight regarding beginning farmers, which by definition is anyone who has managed a farm or ranch for fewer than 10 years.

The publication also highlights what are some of the biggest challenges that beginning farmers face, and the efforts taken by USDA in recent years to address those challenges.

USDA statistical data regarding beginning farmers:

* In 2011, beginning farmers accounted for 22 percent of our nation’s 2 million family farms. However, beginning farmers operated only 11 percent of the acres operated by family farms, and provided just 10 percent of the total value of agricultural products produced by family farms.

* In 1982, 38 percent of all U.S. farm operators had fewer than 10 years of farming experience. According to the 2007 Census of Agriculture, that percentage has dropped to 26 percent.

* Only 14 percent of beginning farmers were 35 years old or younger in 2011. Meanwhile, 49 percent were 35 to 49 years old, 25 percent were 50 to 64 years old, and 12 percent were 65 years or older.

* When compared to established farmers, beginning farmers are more likely to be general livestock farms, and less likely to specialize in grain and row crops, or dairy production.

* Beginning farms are smaller, on average, than established farms. Therefore, one can expect some variation in the comparative amounts of farm and non-farm income that beginning and established farm households receive, and the degree to which they depend on the two income sources.

* The average farm income of beginning farm households is less than that for established farm households — $1,902 versus $18,119 in 2011. But as expected, beginning farm households had higher average off-farm incomes — $89,015 versus $68,172.

* Operators and spouses on beginning farms are more likely to work at off-farm jobs and businesses. Also, beginning farmers are more likely to have a college degree than established farm operators — 30 percent versus 23 percent in 2011.

Challenges confronting beginning farmers:

Beginning farmers often report that their biggest challenges in getting started in farming is access to enough capital and farmland to operate at a size capable of earning a sufficient profit.

* The average beginning farm size was 200 acres in 2011. In comparison, the average farm size of established farms was 434 acres.

* Not surprisingly, the households of beginning farm operators also have lower farm and non-farm net worth than households of established farms. And unfortunately, the challenge of acquiring land in today’s market has been exacerbated by the prolonged rise in farm real estate values.

* The Northern Plains experienced the largest annual increase in farm real estate values in 2012, with an increase of 26.7 percent.

USDA’s efforts to address capital challenges:

Historically, USDA’s farm programs have typically focused on specific crops, conservation initiatives, and disaster assistance. However, that focus seems to be resulting in a disproportionate number of beginning farmers slipping through the financial “safety net” that federal farm programs are supposed to provide.  

* While beginning farmers represent 22 percent of all farms, they accounted for only 14 percent of the farms that received government payments in 2011, and they received only 9 percent of all the payments issued that year.

n Beginning farmers are also less likely than their established counterparts to participate in the federal government’s crop insurance programs. While beginning farmers accounted for 11 percent of the land in farms, they operated only 7 percent of the total acres enrolled in crop insurance.

To help address the challenge of access to capital, since 1992, USDA has been targeting support to beginning farmers under its farm lending programs. Those efforts are reflected in both the number of loans and dollars that the agency is providing to beginning farmers.

* During the 2012 fiscal year, USDA’s Farm Service Agency made 13,384 direct loans to beginning farmers for a total of $1.1 billion in obligations — almost two-thirds of the agency’s total direct loan obligations that year.

* That same fiscal year, the Farm Service Agency also guaranteed another 2,659 loans to beginning farmers, for a total of $639 million. Those figures represent 33 percent of the agency’s total guaranteed loans and 26 percent of the agency’s loan obligations.

* When USDA’s two lending programs are viewed in combination, it indicates that 50 percent of the total loans and 42 percent of the total loan obligations were issued to beginning farmers during the 2011 fiscal year.

To view the entire publication, “Beginning Farmers and Ranchers at a Glance – 2013 Edition,” visit www.ers.usda.gov.

Wes Nelson is executive director of the USDA Farm Service Agency in Kandiyohi County.

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