(FARM AND DAIRY) – According to a report in Farm and Dairy, farming is all about the land. Figuratively, of course. Ask a farmer “why,” and you’re bound to get at least one answer about feeling a connection with the land, being a steward of the land, leaving a legacy on the land.
But, also, quite literally, farming is about the land. Land makes up more than 80% of the value of U.S. farm sector total assets, according to the U.S. Department of Agriculture.
It’s central to the culture of farming in the U.S. It’s also central to what keeps people out of farming. Land is expensive now, more so than it has ever been. It’s also more scarce. There was a 2% drop in the amount of farmland nationwide from 2012 to 2017, the time between agriculture censuses. That’s a drop of about 14 million acres.
Access to and ownership of land also has a complicated history in American agriculture. It’s a privilege that has not always been afforded to all.
These things, combined, make it hard for people to get into the industry that is more connected to the land than any other business in the country.
“Every farm doesn’t start with grandpa buying a farm out of college,” said Seth Wilkerson, a loan officer with Farm Credit Mid-America. “Every story starts with, my grandfather drove a truck and worked night and day, so he could buy a farm.”
You need to find the land. If you come from a farming family, maybe you can borrow some land to get started before going out on your own.
Otherwise, good luck. There’s no centralized resource for all available farmland, just a hodgepodge of private and public services.
You can scan the local auction listings. If you Google “farmland for sale,” you’ll come up with a dozen or more realty websites that aggregate farms and ranches for sale. Most states have a Farm Link program, a combination matchmaking service and database for farmland listings. If you want to find something locally, your best bet is to make connections within your local farm community to find land through word of mouth.
A lot of land that is sold or transitioned never goes on the market. It often changes hands through family or people retiring farmers already have connections with, like other local farmers.
Casey Ellington, of Ellington Farms, in Louisville, Ohio, said she and her husband had limited choices when they were looking for land to start their own farm. They both come from farming families, but her family is in Kentucky, and her husband’s family farm couldn’t support another family. While family members helped them with getting their first few calves and getting them some limited space in a small barn to work out of for a few years, they had to find land.
There wasn’t much on the market in 2011, when they were looking, and prices were high. They eventually found two options, and one worked. Finding those options, Ellington said, came down to making connections with realtors, landowners and auctioneers to let them know when something they might be interested in was coming up on the market.
“You can’t just search Zillow,” said Holly Rippon-Butler, land campaign director for the National Young Farmers Coalition and multi-generation dairy and beef farmer.
A 2016 USDA Economic Research Service report found about 10% of all land in farms was expected to be transferred between 2015 and 2019, most of which would change hands through gifts, wills, trusts or sale to a family member.
Surveys have shown only about 25% of young farmers come from farm families, Rippon-Butler added.
“A lot of young farmers are not connected to access land, and this transition is not going to be accessible to them,” she said.
On top of that, farmland is getting more scarce. It’s vulnerable to development pressure.
Ohio, in particular, has a number of major cities that are growing, and farmland near those cities tends to increase in value — but that’s also where the markets for many farmers are stronger, said Rachel Tayse, coordinator for the Ohio Ecological Food and Farming Association’s Begin Farming program.
“Particularly in Ohio, where we have very stable and relatively expensive per-acreage rates … getting onto land is really a hard thing to do,” Tayse said.
Ohio and Pennsylvania both lost nearly 10 million acres of farmland in the last century, according to USDA stats.
From 2001 to 2016, 11 million acres of farmland and ranchland were converted to urban or residential land use, according to American Farmland Trust, which released a report in 2020 titled “Farms Under Threat: The State of the States.”
The report looked at how land use is changing using spatial mapping analyses. Maps showed red if there had been conversion from agricultural land to urban, commercial, industrial and residential uses. Ohio and Pennsylvania were both ranked as having a high conversion threat.
Even out in more rural areas, thousands of acres of farmland are being considered for solar farms or wind farms. Solar developers like to advertise the fact the land will go back to its original state after the solar lease is up in 30 years, but that doesn’t change that it will be taken out of agricultural use for several decades.
It’s also not available for purchase. I’m sure you’ve also heard about Bill Gates being the largest private owner of farmland in the U.S. According to media reports, the Microsoft founder bought about 242,000 acres, more than 8,000 of which are in Ohio. He’s not the only one.
Nonoperators own about 31% of farmland in the lower 48 states, according to USDA data. In Ohio, 37% of agricultural land is owned by non-operator landlords. In Pennsylvania, the number is about 26%.
Not all of these landowners are tech billionaires or corporations. Some of them are retired farmers who rent their land to someone else.
Not all of those landowners are American, either. About 2.3% of farmland in Ohio is foreign held, meaning someone (or something, like a corporation) from another country owns it. Foreign owners hold about 1.6% of Pennsylvania farmland.
Either way, this leaves a lot of land to be rented and not owned by new farmers. And the USDA found those renting land tend to be younger farmers, under 35.
While renting land is one way to get on it without being tied up with loans, it changes the way people use land. Both the USDA and American Farmland Trust found farmers renting are less likely to put that land in a conservation program, particularly a permanent one, or use certain conservation practices.
Farm Link programs might provide the best shot to matching landowners with prospective farmers. It’s like a combination of a dating service and a realty website, usually powered by some state or federal funding.
Prospective farmers and landowners create profiles detailing what they’re looking for and what they have available, said Marlene Kaltenbach, an associate with Pennsylvania Farm Link. People can peruse the listing online anytime.
If someone finds a land listing they’re interested in, they send in a resume, cover letter or business plan to Kaltenbach. She then passes it along to the landowner, who can choose whether or not to contact them.
It’s hard to say exactly how successful land matching programs and workshops are, Tayse said, who runs the Heartland Farm Link program in Ohio. “Typically when things go well and someone finds a good match … I end up not hearing about it,” she said.
Pennsylvania Farm Link has had three successful matches in the past year, but 158 potential matches. That means the person with land and the person looking for land were connected to each other. They send out an annual survey to get updates on matches and listings, but not everyone responds.
Kaltenbach said it’s not as simple as counting how many houses a real estate agent closed on. Similarly, the process isn’t like finding the highest bidder at an auction or finding a fixer-upper to work on. The whole concept around Farm Link is about building relationships and matching expectations.
“Most of them have invested their whole lives into their farm,” Kaltenbach said, of landowners who use Farm Link “They want to see it continue. Of course, they’re going to look for someone they feel extremely comfortable with. And then say ‘OK, I’m willing to make that next step.’”
You found land. It’s perfect. It’s in the right location. It has the right facilities. Just kidding. Probably not. But it’s there and you can work with it. Now, you need to pay for it. How are you going to do that?
The price of land across the country has crept up over the years. The average price per acre for a farm in 2020 nationwide was $3,160. The price was significantly higher in Pennsylvania and Ohio. The average price for a farm in Pennsylvania is $6,600 per acre. In Ohio, it’s about $6,350 per acre.
At that rate, a 100 acre farm today would cost well over half a million dollars to buy. And that doesn’t include equipment, livestock, feed, infrastructure or labor.
Compare that with the cost per acre in 1970. The average price for a farm was $373 per acre in Pennsylvania and $399 per acre in Ohio.
Depending on your operation, renting land might be more sensible. Average cost to rent cropland, in Ohio in 2020, was $156 per acre. In Pennsylvania, it was $92 per acre.
Renting can be a way to get in, but it doesn’t allow you to build equity through the land. And, though it doesn’t always feel like it when you’re paying your tax bill, owning land helps build wealth.
Many first generation farmers start out at a small scale and work their way up, if they can. Sometimes, farmers can start small without any debt, but if they want to scale up to be more profitable, a loan is almost inevitable (unless you have a rich uncle or are independently wealthy).
“Everyone wants to go out and buy the 200-acre farm as their first land purchase, and that’s just not always practical,” said Wilkerson, the loan officer with Farm Credit Mid-America.
Taking on more debt as a young person can be pretty intimidating, on top of costs for child care, health care and student loan payments. According to a survey done by the National Young Farmers Coalition, the average respondent had about $35,000 in student loan debt.
That’s why the coalition created a campaign calling for farming to be designated as a public service, therefore, making farmers eligible for federal student loan forgiveness.
The coalition argued that student loan forgiveness would eliminate a huge barrier keeping many young people from getting into farming full time. In an industry where the average age of operators is 57, farming needs young people now more than ever.
Wilkerson said they often work with recent college graduates to reorganize their debts to be able to get into farming. The conversations they have with clients look different depending on life circumstances and business goals.
Do you have a full time, off-farm job, but want to buy a chicken or a hog barn, too? Would you rather own the cattle and rent the land you farm? Do you want to get into a grain operation where you won’t get paid until harvest is over? Do you have a home loan, a vehicle loan or student loans and still want to buy a farm or pay for equipment on top of that?
It’s not always about buying a big chunk of land. Think about all the other costs associated with farming: equipment, livestock, seed, fertilizer, labor and infrastructure. Sometimes, the numbers don’t add up.
“Sometimes, denying a loan is the best thing we can do for a farmer,” Wilkerson said.
That’s when U.S. Department of Agriculture loan programs come into play. The USDA can take on more risk than private lenders like banks and credit unions can, Wilkerson said.
Beginning farmers can get anywhere from $600,000 to $1.7 million for a farm ownership loan, spending on the type of program. There are also loans to cover operating costs. The USDA lends money directly to farmers and also works with private lenders, like Farm Credit, on guaranteed loans.
The Farm Service Agency offers a special program to help out with down payments. Through this program, beginners would only have to have 5% down, instead of the typical 20% down. That can be a big help for someone who is short on cash at the time.
Some USDA bureaus, like Rural Development and Natural Resources Conservation Service, don’t have specific programs for beginning farmers. But they may give preference to beginning farmers or have a separate chunk of funding set aside for them.
“For beginning farmers, we bump that payment rate up a little bit, compared to a normal applicant,” said Doug Deardoff, USDA’s Ohio beginning farmer coordinator.
Think outside the box.
When a loan isn’t an option, for whatever reason, it’s not the end of the line. It just means farmers have to think outside the box. There are incubator farms that allow new farmers to establish themselves. Sometimes, long term leases are available through land trusts.
Tayse sees those workshops, networking events and Farm Link programs as good resources for helping people connect. Maybe a retiring farmer can take a younger one under his or her wing to create a transition plan.
What Tayse really wants to see are more resources to make farmland affordable, and more support for landowners and beginning farmers to develop creative agreements and leases that work for both of them.
“There’s a lot more work that could be done to support farm transfers, in general,” she said.
(Rachel Wagoner can be contacted at 800-837-3419 or email@example.com. Reporter Sarah Donaldson contributed to this story)