Young Farmers Challenge Old Paradigms
Farm Business Management Update, February 2002
By David M. Kohl
Recently, young farmers and ranchers have attended various seminars. The following are thoughts and perceptions that the younger generation has expressed at these meetings as high priority in their business and personal lives.
45 Minutes of the Mall
Historically, the business model drove the lifestyle of agricultural producers and small business people. For example, people would sacrifice lifestyle or live in an area without access to social amenities to keep the business or family legacy alive.. For the future generation, lifestyle attributes are equally or more important than the business model.
Many young couples want to live within a 45-minute driving time of a mall or shopping center. A person could have a farm operation six miles from a mall in a congested urban area and still not meet these requirements. Thus, distance factors along with infrastructure, schools, hospitals, and natural amenities or social opportunities will be a high priority in attracting the next generation to an area.
Most young couples see the advantage of investing some part of their net income outside of the farm business. The older generation made up of moms, dads, and grandparents have been left with limited income diversity in retirement because they invested all their earnings back into the business egg basket.
Many young couples regularly place 5 to 10 percent of their net earnings in various investment tools such as Roth IRAs, SEPs, or 401-K plans. The new educational investment plans are being used by these young people. Young couples are advised not pay for the total educational expense of their children. If children support at least half of their education, they gain an appreciation for their education.
According to a survey, the top issues facing the younger generation are time management, family business transition, and environmental and land use planning issues. Many couples have demanding lives with children's activities and obligations with the farm and off-farm employment. Balancing these demands appeared to be a struggle.
Other couples commented that family issues, while not currently a problem, represented a challenge for the future. Variables such as getting to see the financial records, defined responsibilities, and dealing with the children who were not part of the operation were major challenges.
Environmental and land use planning as it pertained to development were major obstacles. Some realized that farming in the area would not be an option environmentally and migrating to another area would be a requirement. Moving has placed many challenges on the family and siblings in selecting a community and area with desirable attributes.
Because of high land values due to development opportunities or farm subsidies being capitalized into land values, opportunities to purchase and finance land are limited. This was perceived to be a major challenge.
Many were renting and leasing farmland as a means of starting and growing the business. Others were using market contracts through vertically integrated firms as a means of stable income. They also indicated that this structure of agriculture allowed them the access of advanced technology through the parent companies and to carry more financial leverage with the lender.
Passion for the Industry
Young people still feel a sense of passion for the industry. Some are developing state, regional, and in some cases, national networks to share ideas and management techniques. Others are creating formal programs to educate and familiarize the non-farm public with agriculture. Some are working very closely with 4-H and FFA groups to provide a positive experience for their children's generation.
Agriculture, particularly in the Mid-Atlantic states, will be much different in the future than the past. The younger generations are breaking the paradigms of the older generations. They are thinking outside the boxes to capitalize on opportunities, networking with others to overcome challenges, and finding new ways to be advocates of the industry.
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