Starting a farm: No path is the same
Farmland values have experienced increases in the recent past. Today, the agricultural land market is inﬂuenced by many factors. A large contributing factor is commodity prices or the income that can be earned from the land. Other key components that influence land value are the amount of debt incurred with land acquisition and government policies, especially policies related to energy, taxes and input costs.
The performance of the U.S. economy and economies throughout the world impact commodity prices, which, in turn, inﬂuences land values. Government monetary policies are significant factors to observe, as they relate to inﬂation and interest rates. Weather-related challenges, both here and abroad, continue to have an inﬂuence on land values. Urban sprawl, real estate development and other land use planning issues impact the cost and availability of land.
It is important to remember that farming is a business. Like any other business, an individual must look at the advantages and disadvantages of operating a farm and evaluate key aspects: including all parties involved with decisions, resources available and different enterprises. This article outlines three paths for getting started in farming: joining another generation on the farm, inheriting a farm, and part-time or small farming. Expanded information files on the materials presented here are available on the Ag Decision Maker website.
The decision to make a living from farming requires much thought. Concrete steps must be taken to give the arrangement the best possible chance for success. A commercial farm business involves considerable quantities of land and capital. Gaining access to these resources can be a major challenge or roadblock for a beginning farmer. Not only is it essential to have physical resources, but one must have the managerial ability to combine those resources into an efﬁcient and profitable farm business. For those who have inherited a farm, it can be both exciting and frustrating. Some people know exactly what they would like to do with the farm, but many do not. A number of questions and issues must be addressed before the ﬁnal decisions are made. For those who enter farming only part-time, even though it is not a career, it can still seem like a full-time job at times. It is important to fully prepare yourself for everything that comes with the responsibility of having a small farm.
Inheriting a farm
Over the next several years the question of what to do with inherited farmland will become increasingly important. The average age of farmland owners continues to increase. According to the 2007 Census of Agriculture, the average age of the principal farm operator was 57.1. The fastest growing group of operators is farmers over the age of 65. The average age of landlords has seen a signiﬁcant increase as well. According to the 2007 Farmland Ownership and Tenure in Iowa study, more than 55 percent of farmland in Iowa was owned by people over the age of 65. Owners over 75 years of age owned 28 percent of farmland in Iowa.