I read some interesting material over at The Progressive Farmer about the demographics of farming, and who’s getting into (and out of) the business. One of the things that disturbs me about the future of farming is how grey the profession is getting; about 30% of farmers are 65 or older, and just 6% are younger than 35. (Less than one percent are 25 or younger.)

Now, part of that is just structural, for economic and demographic reasons. Farming is a capital-intensive business, and many young people just don’t have the access to capital that would put them on a farm. Additionally, while many family farmers intend to pass the farm along to their kids, increasing lifespans and improved health of older folks means that a lot of those 65+ farmers are still going strong. In an earlier generation, they would have retired much earlier and passed the farm down, but today they keep going. Nothing wrong with that – I plan to be working and annoying the young people when I’m 100 – but it can mean fewer opportunities for young folks to run their own operations.

A number of government and corporate organizations are trying to encourage young people to get into farming. For example, the National Farm Transition Group has a mentoring program that matches retiring farmers with young farmers. Demand for the group’s services is strong – there are ten requests by young farmers for a mentor for every available retiring farmer. Many of these arrangements turn into business partnerships, with the younger farmer agreeing to lease or buy the retiring farmer’s property over time. This type of program offers hope for young people who want to get into farming but who don’t have the personal connections (like a dad who owns a thousand acres in Iowa) to just walk right into it.

There is hope for young farmers – I am particularly heartened by the number of young people trying to get into programs like NFTG’s mentor match system. However, we need more participation from established farmers. Simply selling out to big farm corporations isn’t the only exit strategy for farmers, and I hope that more of the established operators will focus on passing their knowledge down to a new generation of family farmers. If you’re a working farmer who has made such a partnership, drop me a line – I’d love to hear your story.

Grim news from California, where continued drought has led Federal officials to decide that there will be a two-week pause in surface water deliveries to farmers starting in March, the first time in 15 years that water managers have completely turned off the tap. Managers say that sparse rainfall and low levels in the reservoirs mandate the move, which could have catastrophic effects on the California agriculture industry in a state already reeling from budget and unemployment problems. Water deliveries could resume if rainfall picks up.

The water shutoff is likely to cause price spikes nationally as farmers are forced to use well water to support their crops; well water is significantly more expensive than the water delivered by the Federal government via the Bureau of Reclamation, which manages a far-flung network of supply lines and reservoirs. In addition to price rises for consumers, the drought is causing large-scale problems and job losses in California. California’s Department of Water Resources estimates that the drought will cause more than $1 billion in lost wages from up to 40,000 lost jobs in the San Joaquin Valley alone.

California is the nation’s largest agricultural state, and more than 755,000 acres of farmland depend on irrigation to produce crops. Water levels are at their lowest since 1992, and water managers say that residential and emergency water supplies will be imperiled if the agricultural sector isn’t cut off. Most California cities are expected to begin mandatory rationing this summer, with residents asked to cut usage rates by 20 percent.

I have nothing but sympathy for the plight of the California farmer, people who were encouraged to grow crops in what is essentially a desert (albeit a desert with great soil) by the promise of cheap water delivered from elsewhere. The problem with that is when “elsewhere” runs out of water, the local supply is very limited in scale. We have benefited, as a nation, from cheap California produce grown year-round, but that luxury may not be a realistic possibility when water supplies are low. It’s another argument, in my view, for an expansion of locally-grown hydroponic produce – grow the crops where the people and the water already are, rather than shipping water thousands of miles and shipping vegetables thousands of miles in return.

I was asked to take part in a survey a few weeks back that addressed the Agricultural Financial Condition for 2009.  The survey was conducted by The Center for Farm Financial Management, North Central Risk Management Education Center, The Northeast Center for Risk Management Education, Southern Region Risk Management Education Center, and Western Center for Risk Management Education.  Ag lenders, educators, crop insurance folks, consultants and a hand full of other experts participated; 2300 of us in total from all 50 states.   The results show that we aren’t kidding ourselves about the current situation but the good news is that we seem moderately if not well prepared to weather this storm.  As I have suggested before, farm debt to equity ratios are astonishingly low, especially when compared to other sectors.   I have provided a link to the full report below.  The report is only four pages long but contains some interesting information and is certainly worth a look. 

Survey Report, Agricultural Financial Condition 2009

http://www.agrisk.umn.edu/Library/Display.aspx?RecID=3971

Despite hopes from some agricultural experts, the recently-passed economic stimulus bill really doesn’t do a whole lot for America’s farmers. Weighing in at a staggering $787 billion, the stimulus expands the federal government by about 25 percent (for one year) – an enormous amount of money by any estimation. (As a DC wit once remarked, “a billion here and a billion there, pretty soon you’re talking about real money.”)

There is some direct funding for agriculture programs in the bill. About $20 billion has been allocated to increase the level of food stamp issuance, which has a small positive impact on agricultural demand. In addition, the USDA has received some increased funding for grants for things like rural housing, infrastructure projects, and health programs in farm communities, and a small budget allocation for improving USDA computer systems. There is also a continuation of funding for biofuel, wind, and solar projects, some of which will find its way into the hands of farmers who have supplemented their crop operations with energy production.

On balance, however, the bill has almost no direct support for the agricultural sector. Hopefully, the spending provisions of the bill will jumpstart the economy and shorten the recession, producing higher demand for farm products and keeping the farm economy humming indirectly. It is clear, however, that the administration does not have the farm community on the front burner in terms of policy priorities.