A few years ago I was the youngest farmer almost everywhere. However, times have moved on. The profitable times in agriculture over the last 3 or 4 years have led to a new generation on Canadian farmers. I even hear from young people who want to farm, but really don’t know how. I recently heard from somebody who is working on a farm, wants to farm but really doesn’t know very much about it. He asked me to give him the top 5 tips for new farmers.
When I first read his request I thought where do I start? I really didn’t want to write a dissertation as long as “War and Peace.” Needless to say, the more I thought about it, I felt it a good exercise. Gone is my youth a long time ago. So are those 23.25% interest rates. My top 5 tips for new farmers.
1. You need capital and lots of it. Its great truth, it takes a lot of money to get started in farming. In fact, no matter what you do, credit can always be a problem. For instance, the 1st operating loan I ever had was at 23 1/4%. Yes, I will admit that was at a very tough time in 1981. It stopped people cold. However in good times like we have today, you still need a lot of capital as operating expenses are very high and margins are continually whittled away. Land is expensive, but it has always been that way. So if you are going to farm, you will need a plan and the availability of capital is key.
2. Don’t over extend yourself into debt. Debt can be a very good thing, but too much debt controls your life. And that tolerance is something that needs to be respected and everybody has a different debt tolerance. If you are going to farm, usually you find yourself in debt for a very long time, it’s almost like oxygen after awhile. You work all your life to build something and to get out of debt. High interest rates and bad economic times are always around the corner. However, these times can be weathered if your debt levels are not too onerous. Simply put, if you get too far into debt, you don’t control your life anymore. Know where you want to go.
3. Embrace new technology, but do it through your own filter. New technology is the lifeblood of agriculture over time those lines have become blurred with the advent of biotechnology. The technology can be very productive but increasingly in 2012 some of it is nice to have but not necessarily needed. Measuring new technology with solid agricultural economic criteria for profitability is key. Technology that gets in the way is garbage. Use your own filter to see what really works and avoid the noise. There is lots of snake oil in the Ag technology buzz.
4. It is so important to have a vision for where you want to go and have a plan to get there. In fact, when asked to speak to agricultural students at the local university that’s all I talk about, having a vision and a plan. When I was a young farmer, my plan was to work as hard as I could, but I didn’t really have a good vision of where I wanted to go. Sometimes life comes along and changes everything. If you have a vision of where you want to go with your farm, you’ll likely get their despite what life brings you.
5. Gain knowledge of our agricultural economics and as an extension of that our agricultural commodity markets. One of my greatest frustrations is the lack of knowledge many people in agriculture have with the very basics of agricultural economics. Simply put, the inherent weakness within that genre naturally leads to very low farm gate prices. A good understanding of agricultural economics helps in that maddening lifelong journey of understanding agricultural commodity markets.
Of course this is an incomplete list, it could go on and on. A good understanding of farm machinery is always good, but that comes along with all that capital that you need and the good understanding of agricultural economics. One old farmer once told me that you could marry more money in 5 min. then you could make your whole life. Yes, there is much more to consider than my 5 tips. Farming continues to be a journey for me and I continue to learn all the time. If you are willing to work, and take the risks, it’s a great life. It’s just like a box of chocolates. I think you know that story.