Market News & Headlines >> Brock Consultant Katie Hancock's Blog: For Young Farmers Is Corporate Farming the Solution to Success?
Insights from Brock Associates Consultant Katie Hancock
Transitions are quickly approaching. Age mixed with economics creates the perfect storm for farm retirement. I say “perfect storm” because it will happen quickly. How will young farmers take on this opportunity?
Unlike the booming years of ag where some farmers were literally (and rudely) asking for land at funerals in determination to add acres, I think renting land will be the easy part now. Retiring farmers will not be willing or able to hand over financial stability in many cases. Young and new farmers will be starting from scratch financially, even though the mentorship and land base should remain solid.
Richard Brock, owner and President of Brock Associates, speaks throughout the country on marketing and economics. Throughout the winter, farmers were no doubt concerned, as they still are, and Rick always shared this positive thought: It is said that luck is where preparation meets opportunity.
From this standpoint, these are the most exciting times since the mid-1980s, so be ready to take advantage of them. This is really hitting home to me now. How do young farmers prepare? What will farming look like in the next decade—much less when I’m at retirement? It comes down to a simple concept that’s challenging to implement—corporate farming.
I want my farm to continue the family farm feel with flexibility and values. I think corporate farming can still be that, but we have to focus on what larger businesses do—which is a system of bureaucracy.
It’s not fun to publically suggest farms become bureaucratic, but that’s what it’s going to take. This means specialized functions, fixed rules, and a hierarchy of authority. Many farms have something like this in mind and function, but it’s rarely written down or strictly enforced.
Why do we need this? Primarily, I think it’s an issue of financial limitations. Young farmers struggle with borrowing capacity, never mind finding ways to grow. Growth is what it’ll take to be sustainable, so financing must be a long-term consideration. Farm subsidies are susceptible to more cuts, creating more risk than we’ve had before.
Many operations rent land, which is kind of like a partnership. It’s the simplest way to share risk, but what about machinery, inputs, and labor? This is not pocket change. Farmers and land owners have done well with a systematic approach to creating rental arrangements. Now we have to focus on the other expenses and investments that make it work.
What will this look like? I think we’ll see more partnerships among farmers currently operating separately. That’s where the bureaucracy comes into play. The more owners and size you have, the more you’ll need a systematic approach for trust, fairness, profit, and reinvestment.
To best honest, I don’t like the idea of partnering with others—it’s hard enough to farm with minimal owners. But farmers will have to grow acres to be sustainable long-term. If that means spreading the risk and maintaining financing through partnering with others, that’s what it’ll have to be. Other businesses consolidate, so we may have to as well.
An even more complicated approach is having investors—like stockholders in a sense. They wouldn’t necessarily participate in day-to-day activities, but would share the risk, investment, and reward. I’ve been in a business like that in the past and it’s not always pretty, but a professional approach with specific guidelines can make it work.
Farming does not have the same atmosphere it once did, and it will continue to change. Size and expenses will not decrease, so it will take more discipline and creativity to make it work. Again, young farmers have an excellent opportunity. We will need to make a plan and keep an open mind as the future quickly unfolds. This isn’t your grandfather’s farm anymore.