WASHINGTON (GA Recorder) – More than half of U.S. farmers will reach retirement age in the next 10 years, but the high price of entry to start a farm, along with rising input costs and volatility in markets, make it difficult for young beginning farmers to take their places.
“Farming is inherently a risky business, but in the environment we currently find ourselves in, that risk is high,” said Nathan Kauffman, vice president and economist at the Federal Reserve Bank of Kansas City in Omaha, Nebraska, at a meeting of the US House Agriculture. Committee hearing Thursday.
The current financial outlook for farmers is particularly difficult.
Farmers face rising costs not only for farmland, but also for fertilizers, fuel, seeds and chemicals. This cost increase is partly due to the war in Ukraine, strains on the global supply system, inflation and bad weather.
Meanwhile, high crop prices that have supported farmers for the past year are expected to decline.
“Uncertainty about the outlook for the U.S. agricultural economy is high and will depend significantly on global factors, particularly the war in Ukraine and the strength of global economic activity,” Kauffman said.
Demand for agricultural loans is expected to increase significantly and capital spending is expected to decline in the coming months for the first time since 2020, according to Kauffman.
House lawmakers are looking for ways to mitigate some of those risks and support young, beginning farmers in the upcoming Farm Bill, the sweeping legislation that will set farm and food support programs and funding levels for the five coming years.
“It is a national and very critical problem. And we must ensure that the next generation of men and women can take the place of those who are retiring from this great profession of agriculture,” said the Chairman of the House Agriculture Committee. , David Scott, an Atlanta Democrat, to his colleagues during the hearing.
“It’s very important to me. And credit is one of those tools that we need to make readily available,” Scott said.
An aging demographic
Aging farmers and the cost of entry into the industry pose a challenge to American agriculture.
A third of the 3.4 million American farmers are over 65, according to the latest agricultural census from the United States Department of Agriculture. The census was carried out in 2017 and published in 2019.
At the time, almost a million more farmers were less than a decade away from the retirement age of 65.
The census revealed that 27% of farmers are considered “new and beginning producers”, with 10 years or less of farming experience. Most of these farmers have smaller-than-average farms, both in terms of acres and production value, according to the USDA.
Members of the House Agriculture Committee said they are particularly interested in knowing whether young, beginning or underserved farmers have access to credit, so they can get started in the world of capital-intensive agriculture. . “On any farm, one of the most critical relationships a farmer can have is with their lender. This is especially true for young and beginning growers. Agriculture is capital-intensive,” said Rep. Glenn Thompson of Pennsylvania, the committee’s top Republican.
“The cost of entry is incredibly high and can be a barrier to entry for these new farmers trying to start or expand their farm operations.”
Federal Loan Challenge
The Department of Agriculture’s Agricultural Services Agency offers a range of different loans to farmers, including one for young beginning farmers.
But in practice, producers say the federal loan process can be cumbersome, slow and difficult to access.
The struggle to get a loan can be particularly acute for black farmers, who may face racism and discrimination when applying for a loan, according to Dania Davy of Alcorn State University Socially Disadvantaged Farmers and Ranchers Policy Research Center in the suburb. from Atlanta to East Point. .
Black farmers reached out to his group for help when the Farm Services Agency recommended they use their credit card instead of a federal loan, or when loan delays put a generational family farm at risk.
“As we review the Farm Bill and prepare for the planned reauthorization, we must seize the opportunity to prevent the imminent threat of loss of black farms, lands and livelihoods that has been institutionalized by racially disparate access to credit,” Davy told the committee. .
Davy recommends a more robust civil rights process at the local level with field agricultural lending agencies.
Julia Asherman, who owns a small organic farm in Jeffersonville, Georgia, was able to fund her operation with three different loans from the Farm Service Agency.
But she said even her achievement highlights some hurdles in the process. It took her two months to get her loan approved and there was no pre-approval option before she identified the land to buy. In a competitive market, a landowner would likely move on to the next bidder rather than wait that long for a loan.
“Farmers easily lose potential properties by not being able to act quickly, and I have personally known several farmers who were unable to use FSA loans to buy for this reason,” Asherman said.
Asherman owns a three-acre certified organic specialty cut flower and vegetable farm with five employees, three full-time and two part-time — a business she operates with no off-farm income.
But the FSA’s loan process is geared towards much larger operations, and it has been difficult to prove the validity of his farm.
“Their expectation of what a farm would look like and what it would yield per acre and what it could produce per acre was in a totally different area from what I had understood because they were really talking about a different type of agriculture,” says Asherman.
The hearing was part of a series as the House Agriculture Committee steps up its oversight work on the 2023 Farm Bill.
Hearings are being held in Washington this month to review farm credit, crop insurance and forestry programs. Lawmakers plan to take their show on the road in August with on-the-ground hearings scheduled in committee members’ districts across the country.