Higher production costs mean fewer new, young farmers

 Resize text         Printer-friendly version of this article Printer-friendly version of this article

Every five years, USDA’s Census of Agriculture offers unique insight into the demographics, trends and changes of the farming community. Conducted since 1840, it provides a critical understanding of the state of American agriculture, and what policies and investments will best serve future generations. In the 2012 Census of Agriculture, released in May 2014, several trends emerged.

While the sales of agricultural products reached a record high of $394.6 billion in 2012, nearly $200 billion more than in 2002, they were moderated by a corresponding increase in expenses.

"Land prices and cost of production have really increased in the last few years due to the demand of commodities and good commodity prices," Matt Erickson, American Farm Bureau Federation economist, said.

Over the past decade, general production costs have grown by roughly 90 percent, recorded at $329 billion in 2012. Additionally, the average market value of land leaped to just over $1 million, up 36 percent from 2007. With the sharp rise in expenses, the industry has become more challenging for new, young farmers who want to start an operation. In 2012, there were 522,058 beginning farmers, defined in the survey as principal operators on their current operation 10 years or less - 20 percent fewer than 2007.

"The connection between new farmers and the spike in land and production costs is all about access to capital," Erickson said. While new farmers can apply for program grants and low interest loan rates, agricultural capital is expensive and high maintenance.

"In order to maximize your production, you have to regularly restock with the most up-to-date equipment, and within agriculture, that equipment is especially energy and capital intensive," he said. "For a new, young farmer this is especially difficult because they have establishment costs as well."

This increasing challenge to break into the industry not only relates to higher production costs, but gives insight as to why family farms continue to dominate the agricultural structure.



Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


RX7320

When moving hay to feed dairy cows, farmers are seeking a versatile tractor. KITOI’s new Tier 4 RX series tractors ... Read More

View all Products in this segment

View All Buyers Guides

)
Feedback Form
Leads to Insight