If you want an example of a paradigm shift, consider these stats from a typical Corn Belt state. In 1982 there were 13,436 operators of farms under the age of 35, and 8,777 farm operators over 65 years of age. In 2007, there were 3,353 farm operators under the age of 35, and 13,062 farm operators over 65. Not much can be done to quickly reverse the trend, but the ramifications of the trend can be addressed.
The data come from the state of Nebraska, and the trend is repeated in every other Corn Belt state. To put it in other terms, in the 25 years between 1982 and 2007, the number of young farmers declined to 25% and the number of senior farmers increased to 149%. University of Nebraska Agricultural Economist Dave Goeller, writing in the Cornhusker Economics newsletter, suggests the demographic trend detailed in Nebraska leads to three potential outcomes. The operator or his heirs will either liquidate the operation, the operator or heirs will rent the land and equipment to the highest bidder or a successor will be found to continue the existing business.
The choice of bringing in a successor vs. the first the first two options is going to be a major decision of the retiring operator says Goeller. Some will not be interested, and that is particularly the case if a successor is outside the family. However, it should be noted that a familiar relationship is certainly not required. The decision about a business successor depends on whether the retiring farmer wants his life’s work to continue. If a family member is available and capable, the decision may be easier to make. But how is a successor identified and brought into the operation?
Goeller says the secret is planning, and if that is not existent, then it is worth it to opt for the liquidation or rental options and avoid the pain involved with a slowly deteriorating relationship between the senior operator and the would-be successor. The retiring operator should be involved in the planning process and the selection process to ensure the right person is selected. Goeller says the process will likely involve some concessions on the part of the retiring operator, but the succession plan will also offer advantages that allow the retiring operator to see the continuation of the operation and benefits to the community.
Beginning farmer programs
While Goeller promotes Nebraska’s Network for Beginning Farmers, other states may also have similar programs that help connect young farmers with retiring farmers in an effort to ensure business succession, rather than business liquidation. He compares it to the Internet dating service E-Harmony, and says both young and old need to fill out a profile that can be matched with the other member of the potential couple. In Nebraska it is up to the parties to contact each other and begin to work on their mutual interests. Goeller notes that a matching service is an important part of the equation, and it is almost impossible for any success to be achieved, if there is not some outside help from a neutral third party.
In Nebraska, as in other states with similar matching services, there are many more would-be successors than retiring farmers. Goeller says Iowa reports there are 10 would-be farmers for every one farmer who plans to retire.
Today’s agriculture has a wealth of older farmers who may want to retire, but have no one to carry on their business. It also has many younger would-be farmers who want to farm, but have no financial way of climbing into a farm operation. Third party networks have been successful in matching potential operators with those who want to leave active farming. Planning is a necessary element needed to guarantee success.