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Successful strategies for beginning farmers

Preliminary information from the U.S. Agricultural Census has recently been released. The average age of farmers in the United States continues to rise, from 50.5 in 1982 to 55.3* in 2002. A farmer is defined as anyone producing or selling at least $1,000 of agricultural commodities annually.

The increase in average age is due to both an increase in the over 65 age group (399,596 in 1982 to 558,581* in 2002) and a decrease in the under 34 age group (356,146 in 1982 to 123,243* in 2002). Despite a new calculation method adopted for the year 2002, which if applied to the 1997 census would have resulted in over 300,000 additional farmers, there are 35% as many younger farmers in 2002 as there were 20 years ago. Why are we seeing the dramatic reduction in the "younger" category?

Preliminary information from the U.S. Agricultural Census has recently been released. The average age of farmers in the United States continues to rise, from 50.5 in 1982 to 55.3* in 2002. A farmer is defined as anyone producing or selling at least $1,000 of agricultural commodities annually.

It is not because younger people don't want to farm. There are some basic economic factors that influence not only potential farmers/ranchers as they consider their career choices but also new beginning farmers as they are attempting to be successful in agriculture.

The cash farm profit margin is the portion of the farm income dollar that results in cash profit. Cash farm profit margin is net cash farm income divided by total cash farm income. A cash farm profit margin of 15% for example would result in $0.15 of cash profit for each $1.00 of total cash farm income. Cash profit margins have been steadily declining over the past 15 years.

Cash flow, cash flow, cash flow! Successful beginning farmer strategies are all about cash flow. The first question anyone entering farming must contemplate is what standard of living is desired and thus what will be the cost of living. The NFBA average for family living was $45,500 for 2002.There are, however, many families that are spending much less or much more than average. What is reasonable for you? Does the cost of living require a non-farm job for a period of years? Living costs tend to increase if you work off the farm. Categories such as transportation, food, childcare and clothing typically are higher if one or more family members works off the farm. These increases may be off set if there is health insurance or other benefits associated with the job. Make a budget. Determine what the farm business must contribute toward the cost of living.

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