Editorial: Production factors make farming difficult for young people
It goes without saying that farming is an enormous component of Iowa’s economy, making it all the more essential that the agricultural sector thrive. However, costs for farmers are rising exponentially, keeping younger people out of the industry, especially those without farm-owning relatives.
The farming population is aging rapidly with an insufficient supply of younger people to replace it. The most recent census of farmers by the U.S. Department of Agriculture found that from 2002-07, the percentage of all farm operators between ages 45 and 64 rose by 13 percent with a 22 percent increase of farmers over age 65. The percentage of farmers under age 45 fell by 14 percent. Keep in mind that this seismic change occurred in a mere five years.
To call farming a risky and costly business would be an enormous understatement. Rapidly rising production costs coupled with the flood of 2008 and the drought of 2012 are making it increasingly difficult for prospective farmers to get their foot in the door of an already hard-to-enter industry. However, the greater cost of more efficient and advanced equipment is far from the driving factor.
The high price of farmland, not more costly equipment that saves money long-term, is the main factor keeping younger people out of the farming industry.
Data from a report by Iowa State University Extension and Outreach indicated that from 2004 to 2013, the cost of machinery for corn and soybean production has risen by around 70 percent and the price of seeds and chemicals has approximately doubled.
Although that is an enormous rise in production costs in such a short time, the cost of land easily dwarfs these expenses. The 2012 Iowa Land Value Survey found that the average cost of all grades farmland in Iowa reached $8,296 per acre — more than triple what it cost in 2003. While 78 percent of farmland sales went to existing farmers last year, only a miniscule 3 percent were new farmers.
Starting a farm alone would of course be a huge investment, considering the Iowa Farm Bureau reported in 2008 that the average Iowa farm comprised 333 acres. For someone who doesn’t own arable land, the price tag on a new, average-size farm with all grades soil would be nearly $2.8 million.
Already saddled with student-loan and credit-card debt, the notion that young people are going to want to go into further debt by buying a relatively small farm is ludicrous. Never mind what borrower would be crazy enough to do that. What kind of lender would actually take that kind of risk?
Jim Gruenhagen, the vice president of operations for River Valley Cooperative in Davenport, said that because obtaining farmland is so expensive, most farms stay in families, and individuals outside the industry rarely attempt to enter it.
More efficient fertilizers and machinery cost more, making it harder for prospective farmers to enter the agriculture industry, but, as Gruenhagen said, these new technologies, which may be more expensive up front, will pay for themselves in the long run and pale in comparison to the expense of land for new farmers.
Clearly, farming costs are high and rising, but when addressing this issue, it’s important to keep in mind the relative price of each expense. A few hundred thousand dollars in equipment is a pretty steep price, but so is a multimillion dollar price tag on a plot of land.
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