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Next Generation Farming

Struggling to Compete

Amid prosperity, new farmers struggle with land costs and interest rates

We didn’t get the white Christmas we wanted this year. We still haven’t had any rain or snow to speak of for the past several months, but we still had plenty to celebrate as we head into 2011.

One great Christmas gift is the incredible rally in grain prices. As we finish out 2010, cash wheat at our local elevator here in Lane County is $7.31 while milo has rallied to $5.33 with corn at $5.65 - prices we thought we wouldn’t see for a long time since the rally in 2008.

To boot, we also had exceptional yields this year. Our wheat, rye, triticale and milo harvests each did exceptionally well thanks to the plentiful moisture we had last fall and earlier this spring.

With big yields and the rally in the market, that’s made the drought a bit more tolerable.

For my wife, Anne, and I, 2010 has been a blur since coming back to farm. The year for us could easily be summarized by Earl Butz’s famous quote on farming, “Adapt or die!”

That’s easier said than done for anyone coming back to farm without ample support from family.  With land prices at record highs, getting a farm started is no easy task. The sticker price on new equipment also boggles the mind.

Skyrocketing land values

And we’re not alone as other young and beginning farmers struggle to enter the business with land costs skyrocketing.

Land prices in Kansas, Nebraska and Missouri rose 9.5% in 2010, according to the Kansas City Federal Reserve. While that has helped strengthen the balance sheet of established farmers who own land, it puts the heat on beginning farmers who may have limited capital or a risky debt-to-asset ratio.

With the rise in land values expected to continue into 2011 amid high commodity prices and low debt levels across the industry, the barrier to entry for beginning farmers won’t be getting lower anytime soon.

Now with interest rates starting to rise, the upcoming generation of farmers clearly has their hands full.

Of course, this is all small potatoes to what other generations dealt with in the past. My parents’ generation carried their farms through the crisis in the early 1980s, my grandfather survived WWII to come back and farm, my great-grandparents took the farm through the Great Depression, and my great-great grandparents had the independence and entrepreneurial spirit to homestead on the hostile High Plains.

When you consider where your farm has been in the past, Christmas takes on an entirely new meaning.

For us, this year marked the 100th Christmas celebrated in our home built by my great-grandfather in 1910. This was also the first Christmas my wife and I celebrated together since getting married and making the move back to Kansas earlier this spring.

That was challenging enough! We’re hoping for another fruitful 100 years.

Merry Christmas, and good luck in 2011!

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