I like to think I can plant soybeans pretty fast, but realistically, I plant them a lot faster than I used to years ago. So that makes me feel good sometimes, especially after a long day when I’ve planted 100 acres by myself amid all the other tasks that go along with that. Back in the day, it took 3 men on my farm to do half of that in a day. A 50-acre day was like so satisfying.
The journey has been long and it continues in June of 2020 with rains stopping my progress. However, its not lost on me this spring, that my world is one where I’m surrounded by farmers younger than me, in fact much younger in many cases. It got me thinking I should re-visit a column I first wrote 8 years ago, entitled “My 5 Tips for New and Young Farmers.” The five points are the same as eight years ago, but times change, I grow older, and new young farmers come along. Life on the farm continues unabated. Here are my 5 tips for new farmers.
1. You need capital and a lot of it. There is no question, it takes a lot of money to get started in farming. Through the years it has changed greatly, but still, the fact is, capital will always be the limiting factor to get into farming. The difference is in 2020, the cost of capital is historically cheap still after successive years of relatively cheap credit. However, several years like this has seen capital pour into fixed assets, which has made farmland and some other fixed assets so much more expensive. Needless to say, you’ll need a lot of capital and the rules of agricultural economics will always apply. Ensuring your marginal revenue is greater than your marginal costs is key. Making more than you spend will always be the litmus test. Believe it or not, the spectre of negative interest rates in 2020 post Covid19 might upset this apple cart.
2. Don’t extend yourself into debt. This might be the 2020 outlier especially when you consider how negative interest rates might work. Needless to say, farm debt is a reality for anybody who is starting farming and often times it takes a lifetime to get out of it. Negative interest rates are one thing, but so is the opposite. My first demand loan was at 23.25%. Managing your debt load helps you keep control of what you are trying to achieve. If it grows too large, you lose more control. Deciding where you are with the control part and the debt part over time, is something that must be considered carefully.
3. Embrace new technology, but do it through your own filter. There is no question, new technology often enhances management and makes the farm better and safer. However, it puts farmers on the continual vicious efficiency treadmill, where to survive, you need to produce more at a lower cost. That will never change. Part of the secret is determining which new technologies are worth the investment? Some of them are not, gimmicky buzz sometimes gets in the way. What you want is tangible technology which works and meets the agricultural economic criteria for payback. Otherwise, it will get in the way and hinder your agricultural economic future.
4. It is so important to have a vision for where you want to go and have a plan to get there. This is probably the most critical thing for young people deciding to farm. Life is full of forks in the road and often they are life changing. However, knowing what you’d like to do and where you’d like to go with your farm life is crucial to making it happen. It’s the vision thing. Keep in mind, it can be a long life. Keep your options open. Be open minded. You have the whole world before you.
5. Gain knowledge of our agricultural economics and as an extension that of our agricultural markets. It’s important to understand, how our agricultural economy works. Its important to gain some type of appreciation of the agricultural economic levers that determine farm prices and the different forces that affect that. Agricultural economic rules are never breached without consequence and are continually working in the background of our farm economy.
Covid19 is one of those forks in the road. We all know how lives have been changed over the last few months. There have been others, like Mad Cow disease, 9/11 and changes in government. There will be more. A good knowledge of farm machinery helps, but that’s part of the that proverbial agricultural economics equation. Sure, there is much more to consider than my 5 tips. Farming continues to be a journey for me and can be a great life. Risk is a default, but if you are willing to work, it can be a great life. It’s just like a box of chocolates. I think you know that story.