Land: The Critical Investment for Young Farmers

Like me, many young adults growing up and going through school have some sort of aspirations of starting their own livestock operation, farming corn and soybeans, or just owning a place for hunting and other forms of recreation. However, all three of these require an asset that involves a huge investment. Land. 

If you read any scholarly article or agricultural website, they will all say the largest challenge for young and beginning farmers is their access to land. This asset is like gold. It is in huge demand, making its availability limited and its price sometimes astronomical. Unfortunately, land is a hard commodity for young and beginning farmers to get their hands on, especially when they are starting from scratch. In addition to wanting to take out a loan to purchase land, they may already have the burden of carrying student loan debts upon graduating from college. As years go by, land prices have continued to rise, possibly putting an aspiring farmer or rancher further behind in the race to become a profitable producer. This brings up the question, what tools are there to help them achieve this goal?

Federal programs were established to help beginning and young farmers achieve their goals in starting their operations. Two-thirds of farmland will need a new farmer over the next 25 years as older farmers retire, and the USDA and Farm Service Agency (FSA) have programs that give out loans specifically to new farmers to meet this need, offering them loan incentives, low-interest rates, and payment flexibility. 

To classify as a beginning farmer or rancher, the individual must meet the following requirements, where any given applicant: 

• Cannot be operating for more than 10 years
• Does not own a farm or ranch more than 30 percent of the average farm in their county 
• Meets loan eligibility requirements for the specific loan they are applying for
• Plays an integral role in the operation

I was able to talk to Tyler Comes, one of my friends that rents 80 acres of farmland in southwest Iowa. He went through his county FSA office and chose to take the microloan option. He said it is the easiest for him to pay back, and it can go towards his cost to rent the land as well as his production costs. 

Tyler was able to create a good relationship with his FSA office as well as his loan manager that covers three counties. He said that, despite the loan manager covering a large area, they are still on a first-name basis. 

“He will always call, no matter what, to check up on me and see how things are going,” Tyler said, expressing his experience with the loan manager.

Since he leases the land he farms, another program that Tyler takes advantage of is the Beginning Farmer Tax Credit Program. Through this program, landowners in Iowa receive a tax incentive when they lease their ground, equipment, or buildings to beginning farmers. The tax credit can equal up to $50,000 per taxpayer per year up to 10 years. Through this program, the exchange offers a profitable deal for both buyers and sellers.

Many people can be wary of government programs when financing their operations, but the FSA has managed to develop a tool for young farmers and ranchers to get started on their operation. The FSA cannot succeed if the farmer does not succeed. For more information about these FSA programs that aim to help young and beginning farmers, you can contact your county FSA office, or look up their beginning farmer loans online. 

Another tool available to young and beginning farmers is the National Young Farmers Coalition that was established in 2010 with the goal to help young farmers succeed. Some of their services include helping beginning farmers find land that is available by publishing resources and educating farmers on land access. The coalition also works with legislation to prioritize funding for land conservation. It is eco-friendly and affordable, incentivizing land transition and improve state and federal programs designed for helping young farmers. 

Currently, with the markets being down, those who are wanting to start an operation may have more buying power to invest in their start-up. However, there is still a lot of uncertainty for when the next year comes around. If they have a grueling year, the crops or livestock they harvest may not cover their production costs. Remember, young farmers may already be going into agriculture with significant mounds of debt, possibly having student loans or other payments. The last thing they need is a bad year that keeps them from making operating loan payments. 

Farming can be a gamble at times. Those who are looking to start an operation must be hard-working, resilient, and adaptable to change, and, with land having a price tag that never seems to fall when the economy is not in hardship, those starting their operation have to have a plan and a support system to ensure their success.

It is in my aspirations to one day have a small cattle operation, and I will be looking for ways to fund this ambition. As a young adult that did not grow up on a farm, I would most likely be starting from scratch on this pricey endeavor. When the day comes where I decide to take the leap in starting one of my passions, I will most likely turn to the FSA and other organizations and programs that I know can aid me.

As I already stated, two-thirds of US farmland will need a new farmer in the next couple of decades, and it has become a mission and a race for different organizations like the USDA, FSA, and National Young Farmers Coalition to meet this demand.