The Future of Family Farms

Paul LasleyDepartment of Sociology

Iowa State University

What is a family farm?

• Labor• Capital• Management

• Residency• Dependency• Ownership of land

Non farmNon farmcommunitiescommunities

Farm dependentFarm dependentcommunitiescommunities

The Twin Pillars of Rural Culture

Changes in the State

CommunitiesCommunitiesinin

TransitionTransition

• Population mix• Industrial base• Occupational

shifts• Lifestyle choices• Linkage to urban

places

Changes in Production Agriculture

AgricultureAgricultureinin

TransitionTransition

• Decline in farm numbers

• Increased farm size

• Contracts & integration

• Dual agriculture

Conflicts at the Interface

Non FarmNon FarmRural Rural CommunitiesCommunities

ProductionProductionAgricultureAgriculture

Number of U.S. FarmsNumber of U.S. Farms

1.9

6.8

1.9

1865 1975 1985 1900 1910 1920 1930 1940 1950 1960 1970 1980 19920

1

2

3

4

5

6

7

8Millions

Industrial Petro-chemicalBio-genetic &

Managerial

Rural, Urban and Farm Population in Iowa

0

0.5

1

1.5

2

2.5

3

1940 1950 1960 1970 1980 1990 2000

Farm Rural nonfarm Urban

Millions

Trends in Post 1980s Farm Crisis

• Quite similar to the post-Depression years of the 1930s

• Many farm families are tired of economic hardship and are encouraging their children to look elsewhere

• Young people that are selecting careers in 2000s are the products of the 1980s farm crisis. They grew up in a climate characterized by tough economic times and pessimism.

Fig. 7

For farm youth born since 1980, what have been dominant messages?

• Hard times, economic hardship• We can’t afford this• Limited opportunities• Get an education & find something else to do• There are better opportunities elsewhere• There is no future in family farms• Get big or get out• Good place to live, poor way to make a living• It’s a tough way to make a living

Fig. 8

Media Messages about farming in the post 1980s farm crisis

Literature• A Thousand Acres• Broken Heartland:

The Rise of America’s Rural Ghettos

• Lone Tree

Movies• Country• The River• Places in the

Heart• Troublesome

Creek

Fig. 9

How this is reflected in national numbers

<25 25–34 35–44 45–54 55–64 65+ Total

1982 62,336 293,810 443,420 505,412 536,402399,5962,240,976

% 2.8 13.1 19.8 22.6 23.9 17.8

2002 20,850 128,455 371,422 466,729 427,354497,0291,911,859

% 1.1 6.7 19.4 24.4 22.3 26.0

1982–2002Change -41,486 -165,355 -71,998 -38,683 -109,048+97,433-329,117

% Change -66.6 -56.3 -16.2 -7.6 -20.3 +24.4 -14.7

Who will be the future farmers in Iowa?

<25 25–34 35–44 45–54 55–64 65+ Total

1982 2,852 17,458 21,282 21,744 25,287 16,557 105,180

% 2.7 16.6 20.2 20.7 24.0 15.7

2002 869 5,282 17,331 24,555 20,227 22,391 90,655

% 0.1 5.8 19.1 27.1 22.3 24.6

1982–2002Change -1,983 -12,176 -3,951 +2,811 +5,060 +5,837 -14,525

% Change -69 -70 -18 +11 +25 +26 -13.8

How many beginning farmers in Iowa?

2002 Census of Agriculture

Number Percent Under 25 ............... 869 0.1 25-34 .................... 5,282 6.0 35-44 .................... 17,331 19.1 45-54 .................... 24,555 27.1 55-64 .................... 20,227 22.3 65+....................... 22,391 25.1

Total 90,655 100.0

Population Change and Demand for New Foods

Consumer Driven Agriculture

Population projections2002 2020

Hispanics 12.6% 18.0%Asians 3.9% 5.0%Whites 71.0% 64.0%Blacks 12.0% 13.0%

U.S. population stands at 281 million and by 2020 will grow to about 331-361 million (50-80 million).

Influence of consumer driven agriculture

Consumer Driven Agriculture

Demand for farm products will increase as population increases

Demographic shifts—shifts in food tastes and preferences

Increasing per capita income will reward quality

Consumer Driven Agriculture

Aging baby boomers, those born between 1946-64 will approach 54 million by 2020

Market growth and potential for older population, less active, higher standard of living

More expensive cuts of meat, exotic vegetables, luxury food items, ready to eat, higher priced restaurants, etc.

Consumer Driven Agriculture

Per capita income growth is projected to be about 1% annually between 2000-2020, compared with 1.2% that occurred between 1988-98

Key question is how much of this higher disposable income will be spent on food and what types of food will be demanded

Consumer Driven Agriculture

Projections are:

More fruit, vegetables, fish, poultry, cheese, yogurt and prepared foods

More eating out—Dash board dining More attention to diets, health and

wellness

Why young people choose farming?

• What values shape this career decision?– Freedom and independence– Be own boss– Family—good place to raise children– Being able to work outdoors– Living in the country– Family tradition– Enjoy working with nature

The social values vs. economic reality

• Decision to farm must reflect both the social values of wanting to farm with the economic realities of the marketplace.

• “Good place to live, if you don’t have to make your living from it.”

What is farming?

• Farming is not about driving a tractor• Farming is increasingly about:

– Reading the market– Financial management– Marketing– Producing for a market segment– Negotiation of contracts

What do farmers enjoy?

• Crop and field work• Working with livestock• Purchasing equipment• Marketing• Exploring new idea• Record keeping/paperwork

Farm Activity Preferences

Dislike

Greatly

Indifferent

EnjoyGreatly

—————————— Percentage ——————————

Crop/Field work…………………………

1 2 12 38 47

Exploring new ideas……………………

1 4 24 48 24

Working with livestock………………..

7 8 21 34 30

Working on machinery………………..

4 9 27 39 22

Marketing/Purchasing livestock……

9 12 31 33 15

Marketing/Purchasing crops………..

5 16 32 37 10

Purchasing equipment………………..

6 14 33 34 13

Record keeping/paperwork………….

11 22 33 25 9

Going to farm meetings……………….

14 21 36 23 5

Desires about Succession (1996 Farm Poll, n=1,982)

• 75%… would like farm to remain in family when they retire

• 68%… if they had it to do over, they would still choose farming

• 63%… would continue if suddenly became rich• 55%… would like to children to take over farm

when they retire (21% were undecided and 24% replied “no”)

• 30%… would recommend farming to a friend (24% were not sure, 46% said “no”)

What will happen to your farmwhen you retire?

One of my children will take it over and eventually inherit ......................... 25%

I will cash rent to a tenant .................. 20% Don’t know........................................ 15% Crop share to someone....................... 11% Not applicable—don’t own land............ 11% Sell to one of my children ................... 10% Sell to a nonfamily member................. 8%

2004 Iowa Farm and Rural Life Poll (n=1,514)

• 57% would not encourage young people to enter farming

WHY? • 87% young people cannot afford to buy the

equipment, land, crop inputs, etc• 73% farm profits too low• 73% there is too much risk• 65% land is not available• 20% requires too much manual labor• 15% young people not interested in living in

country

Some observations• Age distribution of farming is probably not

much different on farms than what exists on main street in many Iowa small communities.

• We have evolved from a nation of self-employed to one of employees. The question of succession is broader than farming, it needs to raised in terms of other forms of small businesses…grocery stores, farm supply, banking, service stations, equipment dealers, furniture stores, etc.

Recognition that Entry into Farming is a Process not an event

• Most studies of succession have focused on the legal, financial and public policy aspects

• More attention should focus on the family processes

• Too often in ignoring the role of the family, we have saved the farm and lost the family.

• Small business succession, whether a farm or nonfarm enterprise is a family affair

What are the implications of unabated consolidation in business

and industry?• Quality of products or service• Changes in the occupational structure• Attachment to place• Environmental consequences of

consolidation• Vulnerabilities of consolidation• Changes in opportunity structure

Business Succession

• Raises questions about what can or should be done to create opportunities for the next generation

• Highly mobile, energetic, well-educated young people will migrate to areas to where there are better opportunities

• Hence, it is critical that we think in terms of creating opportunities for future Iowans

Skills Needed to be Successful

• Entrepreneurs• Risk Management• Complex interactions between farming

and the environment• Marketing• Food safety and quality

Identifying Opportunities

• Get an education– Farming is about acquiring and applying

knowledge– Analytical and reasoning skills– Creative and critical thinking– “Farming in an information age”

• Travel– See how others are farming – Travel abroad– Exchange programs

• Explore the world on the Internet• Learn about other cultures

– Learn another language• Ask Questions

• Seek out a mentor– Someone who can share their stories of

successes and failures

• Learn about existing resources to assist you.– Beginning farmer loans– Beginning farmer programs

Thank you

Needs of Beginning Farmers

• 95%… agreed that beginning farmer’s spouse need to have an off-farm job

• 92%… agreed beginning farmer needs to have an off-farm job

• 86%… agreed assistance from family or other farmers will be necessary

• 68%… beginning farmers will be limited to sons and daughters of current farmers

• 58%… beginning farmer should live on farm• 36%… beginning farmer should buy land

Why should society be concerned about the structure of local

business?• Population retention and quality of life

reflects opportunities• The life blood of many of Iowa’s 839

rural communities depends upon farming and rural population

• The viability of social institutions depends upon opportunity structure

What do beginning farmers offer?

• LABOR• MANAGEMENT SKILLS• TECHNICAL COMPETENCE

To be successful…you need to:

Figure out how you you can become the low cost producer against everyone who is producing the same products as you.

ORFigure out a niche where there is limited or no competition…where you offer a superior, highly differentiated product.

Consequences of these trends

• Farm consolidation• Specialization in production• Movement from general farms

producing a wide variety of crops and livestock to one or two commodities

• Vulnerabilities of specialization• Fluctuations and increased risk

Secondary Consequences

• Decline in farm numbers• Larger farms• More capitalization of existing farms• Aging of farm population

– Fewer opportunities for beginning farmers– Technology enables farmers to continue

farming longer

Consequences

• Loss of farm population (out migration)• Rural neighborhoods vacant during the

day, owing to larger numbers of part-time farms

• Industrialization of livestock• Increase in rural nonfarm residences

Farm Plans in Next 5 years 1999 Farm Poll (n=2,583)

• 15% quit farming• 13% take son or other family member

into farming operation• 12% quit raising cattle• 21% quit raising hogs

Of those planning to quit farming in the next 5 years, 53 % were retiring

• Of those retiring…what will happen to your farm?– 59% family member will continue it– 60% farm will be rented to nonfamily– 21% farm will be sold

What are Farmers Predicting for the Next 10 years (1999-09)?

• 99% likely that farm number will continue to decline

• 95% low farm prices will put many out of business

• 96% more reliance on off-farm income• 82% cost of living will prevent many

from retiring at age 65

• 18%… Contracting in farming will provide farmers with better incomes

• 5%… more young people will enter farming

Directions in Economic Development

(2001 Farm Poll)

• 67%… tax incentives for employers who hire Iowa graduates

• 69%… emphasize production agriculture and related industries

• 76%… raising wages is needed to attract and retain people

• 67%… emphasize main street development