Young Rancher Needs
Published on Tue, 07/13/2010 - 11:46am
Traci Bruckner has a lot of experience with beginning cattle operations. As assistant director of the rural policy program at the Center for Rural Affairs, the Wayne, Neb. native helped lobby for the beginning farmer and rancher provisions in the 2008 Farm Bill; she’s also served on USDA’s Beginning Farmers and Ranchers Advisory Committee 2007-09, and at one time she and her husband had their own cow/calf operation.
And so, too, she hopes, will her ten-year-old son. “His dream is to become a farmer,” says Bruckner, “and he really likes livestock. He has a couple of breeding heifers now, and we’re just trying to add to that each year. Then, hopefully, by the time he’s an adult, he might have some assets to start with.”
That good starting point could be crucial; Bruckner says access to land and to capital are among the biggest challenges facing a beginning rancher. “You don’t find a whole lot of traditional ag lenders willing to stick their necks out for a beginner,” she says, “unless that beginner is walking into a well-heeled operation. If they don’t have a lot of equity behind them, they’re typically not going to be able to get a loan.”
One of the improvements in the Farm Bill is called the Down Payment Loan Program; qualified applicants can put 5% down and receive 45% of their loan from USDA’s Farm Service Agency and the rest from a traditional lender, with 90% of that backed by a government guarantee. “Those are the types of loans and programs that make a difference for a beginner when they want to work with a traditional bank,” Bruckner says.
Even if credit is available, the beginning rancher has a lot of decisions to make. “Some of the folks we work with have not had any experience on a farm,” Bruckner says, “or they are a couple generations removed from the farm.” Before starting, they need to review the different production systems that can be employed, as well as basic business practices like bookkeeping and money management. And “sometimes,” she says, “part of the challenge is building relationships with people, so they can be successful out there.”
That means knowing your market, and USDA programs can also provide benefits here. USDA Rural Development offers a Value Added Producer Grant; qualified operators can receive money to assess the potential of the type of marketing they plan to pursue. For those who plan to stick with traditional commercial production and marketing avenues, it’s important to know which outlets will be available, such as auction yards, private treaty and more sophisticated marketing alliances.
USDA continues to work toward improving opportunities for beginning farmers and ranchers. Agriculture Secretary Tom Vilsack recently said he’d like to see the next Farm Bill, to be written in 2012, set as a goal bringing 100,000 new producers into the business. The ’08 Bill actually has a Beginning Farmer and Rancher Development Program in the Research title; Bruckner says that supports organizations that provide mentoring, training and education opportunities. Conservation programs also have funds earmarked for newcomers; the Environmental Quality Incentives Program will cost-share 90% with new ranchers who install rotational grazing systems. They can get the grass seed paid for, the fencing paid for, the water lines paid for,” Bruckner says. “That’s a big deal, and I actually talked with a rancher out in western Nebraska whose son did do that.” The U.S. farm population has been aging much faster than the general working population; in the 2007 Ag Census, the average farmer was listed as 57 years old—an increase of two years since 2002. Many states have initiated “land-link” programs that seek to bring retiring producers together with young people who would like to take over their operations. Bruckner says the programs work, but have not been as successful as they’d like. “You can’t just take a retiring farmer and a beginning farmer, introduce them to each other and send them on their way,” she says. “It takes a lot of joint goal setting. It’s really almost like finding your life partner; it takes a lot of that kind of match-up in compatibility, where you have similar goals, you have similar values, and similar outlooks on how to run a farm or a ranch.”
In Iowa, the program is called AgLink. Dave Baker, farm transition specialist for Iowa State University Extension, says the biggest problem is an imbalance of supply and demand. “On my database here in Iowa,” he says, “I’ve got 355 young people that would like to start farming or ranching, and I’ve got maybe 18-20 retiring farmers. So the odds are stacked against us getting something done quickly for young people.” It’s also increasingly difficult to find rangeland or grassland for a new cattle operation; in Iowa, a lot of that land is either locked up in the Conservation Reserve or is being converted to cropland by farmers with an eye toward the recently attractive corn and soybean prices.
But Baker anticipates a rash of retirements; Iowa State estimates 15,000-20,000 of the state’s farmers will be hanging ‘em up in the next 5-10 years. In many cases, those producers do not have succession plans; their sons or daughters, if they have them, may not want to continue to operate the family farm.
At the same time, young people who want to get into farming or ranching may not have the capital needed to buy the farm. The solution Baker is pursuing—lease, instead of buy. “Over time,” he says, “the young person might be able to buy the actual land. But for starters, let’s just have them buy the machinery from the older generation and then purchase the stock cows or the breeding stock, get started in that way—purchasing assets that are going to turn over, as far as their return, on assets much quicker than farmland would.”
Because start-up operations tend to be small, many first-time producers will have to keep their day jobs to generate off-farm income. But many will also turn to specialty ranching, raising livestock for local consumption. “We’ve got quite an increase in individuals interested in locally grown foods and meat products here in Iowa,” Baker says.
These producers can sell direct to consumers or explore other marketing avenues, such as the Internet. Although such operations are more labor intensive, they also produce higher returns. “What the younger generation has ample supply of is labor,” says Baker. “They’re short on the capital, so we can try and exchange some of the older person’s capital for the younger person’s labor, and they really do fold together quite nicely.”
Tom Jones, at 51, may no longer be considered a “young” rancher, but the Pottsville, Ark. producer has been following in his father’s footsteps both as a cattle raiser and a farm leader; he’s current Vice Chairman of the Cattlemen’s Beef Board Operating Committee, and Secretary-Treasurer of the Arkansas Farm Bureau. “There are so many things that are happening so differently than we’ve ever had to deal with before,” says Jones. “With animal care issues, with food safety issues, all those things. But I’ll tell you, what I have is a lot of faith in our young people, especially those who choose any aspect of agriculture. Someone who wants to get into livestock agriculture, it is a profession that in some way you could even have if you had another vocation in town, an off-farm job. But I think with the Extension Service, and—quite proudly—organizations like the Farm Bureau to help you and assist you in those kinds of things, I think young people can get information on how to start.”
While Jones says there’s no question the financial commitment is a challenge and financial backing is a requirement, he sees some young people getting into ranching in his area. “In Arkansas, given that a lot of producers, especially cow/calf producers, are not large producers. The average size of the herd in Arkansas is still less than 30 head per farm. If somebody wants to get in, all I can wish is that they have that desire and that backing and get that done, because we know the age of the American farmer is still getting older…we’ve got to have some young people producing.” Traci Bruckner hopes the opportunities are still there when her son is ready to get into ranching as an occupation. “I think one of the biggest challenges for beginners” she says, “is the fact that we see consolidation in agriculture…I think if we really want to make a future for beginning farmers and ranchers, we need to make sure that the policies in place don’t create unintended consequences and erect barriers that they cannot seem to get around.” Her own experiences as a rancher, she says, are “why I’m working with beginning farmers and working on federal policy, to really try and make a difference in that and find creative, unique markets for beginning farmers to get started so they can get started successfully.”