As a group, growers are going gray faster than newcomers are entering the profession.
In the next two decades, about a quarter of all U.S. farmers are expected to retire. Meanwhile the number of new people entering farming has declined.
In 2012, the number of people farming for 10 years or less was 523,000, a 20 percent reduction from 2007. If you compare numbers for farmers with five years or less experience, the percentage drop is 22 percent.
There are six times as many farmers over 65 years old as there are farmers who are 35 years old or younger.
Reasons for the shrinking number of beginning farmers are many, but two of the biggest challenges cited in a nationwide survey of young growers are lack of access to capital and access to land. To help remedy this, the 2014 Farm Bill included development and loan programs for young farmers.
USDA’s Beginning Farmers and Ranchers Development Program provides about $20 million per year, from 2014 to 2018, for competitive grants to community organizations, agriculture groups, academic institutions and extension. The grants must support education, training, outreach, and mentoring programs for the next generation of farmers.
Help from the federal government also comes in the form of a loan program for young, beginning growers administered by USDA’s Farm Service Agency.
FSA recently increased the amount given for microloans, from $35,000 to $50,000. These can be used for operating expenses, for example. FSA also gives direct loans of up to $300,000 and guaranteed loans of more than $1 million. The direct and guaranteed loans are designed for those unable to obtain financing through commercial lending sources.
Other loans exist for young growers. Nearly 20 states, including Washington, Oregon, Minnesota, Wisconsin, Pennsylvania, and New York, and have created tax-free bond programs called “aggie bonds” to assist beginning growers. There is joint financing between FSA loans and private and public lenders, and Farm Credit cooperatives, too, have loan programs for young beginning farmers.
An example of help given from state tax-free bonds is the Washington State Housing and Finance Commission’s Beginning Farmer and Rancher Program. The program was launched in 2008 to help beginning growers acquire agricultural property at lower interest rates. Because states cannot loan money to private individuals, a lending partner is needed.
In the Washington program, the state determines if applicants meet their agricultural producer qualifications, which follow Internal Revenue Service agricultural tax codes, while Northwest Farm Credit Services, a grower cooperative, is the lender and makes the lending decisions, according to Wendy Knopp, vice president of AgVision for Northwest Farm Credit Services.
More than 25 loans have been approved through the program. Because the tax codes are very specific in defining beginning farmers, the state program is limited in its reach, Knopp says. However, by using tax-exempt bonds, the state program can help beginning farmers with significant interest rate savings.
All Farm Credit cooperatives have some type of loan program for beginning farmers who may or may not meet regular underwriting standards. Since 2001, Northwest Farm Credit Services, the lending cooperative for growers in Washington, Oregon, Montana, Idaho, and Alaska, has offered the AgVision program to give young and beginning producers preferred rates and flexible terms.