I hope you had the opportunity to read my introductory article on consolidation in the row crop industry. Entitled “Why Would We Focus on Keeping Families on the Farm?”, it set the stage for this series of articles on the major factors in consolidation. The five factors we will explore include: 1) farmer age, 2) rapid integration of technology, 3) capital access, 4) staff and organization structure and 5) inability to envision the future of crop ag.
USDA Census of Ag - Farmers are getting older
The USDA Census of Ag, conducted every 5 years, is a good source of information about trends in the industry. The simple fact is that farmers are, on average, getting older and older, and the number of younger persons choosing production ag as their profession is declining rapidly. This data tells the story:
Of the 2.1 Million Farmers (Principal Operators) in the U.S. (according to the 2012 USDA census):
The first question we must ask is, “What will happen in the future as those older farmers retire or die?” How many of those 680,000 do you think will still be engaged in farming in 2030? Three-quarters? One half? Less? You choose, but if they all make it – and they won’t – we still would have only half as many farmers to replace the 1,309,000 older ones who will retire, leave farming, or die. And there are only 120,000 younger farmers who will move from the “34 and under” age group to the “35-54” group. 120,000 is only 18% of the current 680,000. Do you really think all 118,000 will survive and go on to farm? You fill in the number you believe will be left in 2030.
Who will farm the acres?
We have 911,000,000 acres of farmland in the US today. Of those, 340,000,000 acres are row crops. Looking ahead to 2030, whatever number of farmers you predict in each age group, who will farm those acres to meet our nation’s and the world’s need for food? We know those acres will be farmed – by those with the capital, technology, staff, org structure and ability to envision and prepare for the future.
Where is the wealth in agriculture?
The second question we must ask is, “Where is the wealth in agriculture?” If you answered, “With the older farmers,” you are correct. So where will that wealth go as those older farmers leave? Some will be passed to future generations of farmers but that is likely a small percentage; most of that wealth will leave agriculture and pass to investors, to children living off the farm, etc. Think about the impact to rural America as this wealth moves from the local farming community.
What does this mean for the future of row crop farming?
Family farming has been a valuable legacy in the U.S. since our country was founded. Traditional ethics of hard work and honesty are associated with family farmers who are part of the very fabric of our nation’s history. Today, farm sizes are increasing so rapidly that many farm families are finding it difficult compete with larger farms and, in the future, corporate farms. As a result, those families, who often have farming roots going back several generations, are forced to sell out or become employees of those conglomerates. We hate it, but we cannot do anything to stop it. I don’t believe anyone can. Wringing our hands and protesting does not help. Farm families acknowledging the situation and proactively engaging to position their farm business to compete successfully is the only answer.
What can be done to help farm families who want to continue their family farming legacy?
In order to compete, they must gain business skills and have access to outside expertise and resources. Technology, capital access, adequate staffing and increasingly complex organization structure are all areas where the typical farm family needs help. Watch for my next article on the rapid integration of technology in agriculture.
FamilyFarms Group, owned by its farmer members, was created to provide assistance in those areas and more. Your family farm legacy is in danger. The success of your farming business depends not on your ability to grow a good crop, but rather your ability to manage, access enough capital, and implement sound processes. Give us a call today to learn how we can help your family stay on the farm. 618-372-7400.