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Record-High Land Prices Challenge Aspiring Farmers
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Agriculture industry experts say now is a great time to be a farmer. Exports are up. Prices are up. Land values are at record highs. That’s great if you already own a farm. But for young people who want to break into the business, all that success means it’s tough to afford farmland. WOSU traveled to Hancock County to talk with a couple of young farmers who are on different sides of the farmstead.
It’s a warm, humid day on Biglick Acres farm. It’s just east of Findlay, in Northwest Ohio. The previous day’s rain keeps workers out of the field, but owner Adam Kirian keeps busy.
Kirian helps his brother put up an electric fence to keep their beef cattle out of the nearby corn fields.
“My grandparents had put fence up probably 30 or 40 years ago, and we just tore it all out this spring. And [we] finally got a wet day here where we could get back to putting up some new fence.”
Kirian farms about 1,600 acres total, mainly corn and soy beans. He’s 25-years old.
Kirian said farming was always in the cards for him. But the likelihood he would own any land as a 20-something would have been out of the question if his uncle had not decided to step away from the family business. That left his 88-year-old grandfather looking to the next generation for help.
“You know, if you don’t have an opportunity where somebody gives you a large section of land, somebody giving you a big help, it’s not something you can just go out and do on your own, no,” Kirian said.
The main reason: sky high land prices. Farmland values are the highest they’ve been in decades. In Ohio, an acre can cost up to $8,000.
The average Ohio small to medium-sized farm is 1,500 acres. At $8,000 an acre that farm would cost $12 million.
Then the farmer has to buy equipment. A used combine can go for $150,000.
Land prices in other mid-west states are even higher. Joe Cornely is spokesman for the Ohio Farm Bureau.
“A record was set in north central Iowa earlier this year of over $22,000 an acre,” Cornely said. “So that gives you a clue of what young people, anybody, who wants to either get started or expand in agriculture is facing.”
Farming is in the midst of what Cornely calls a “golden age.” Farmers are making good profits. And Cornely said that makes it even more difficult for beginners to buy ground.
“A lot of the reason that we’re seeing land prices go up, for example, is that farmers have the cash; they have the financial resources to go out and buy more land…so you’ve got the people who are established who are out their competing with land.”
But it’s not just the established farmers who are driving up the price; investors seeking a good return out-bid local farmers at auctions.
Young farmer Adam Kirian said that’s happened in Hancock County.
“There has been a lot of outside money that’s come in to purchase ground to give them something secure,” he said.
While federal and state programs help some aspiring farmers get low-interest loans, there are few other options. So most young farmers turn to cash renting. That’s what farmers call it. They pay the landowner to farm the land.
28-year-old Eric Moorhead has cash rented land since 2007. He lives west of Findlay in McComb and farms full time. Moorhead pays multiple landlords to rent 1,300 acres.
“It’s cheaper than buying ground right now.”
Cash renting can cost a farmer about $200 an acre, much cheaper than buying. But Moorhead said the farming boom has driven up cash rent rates.
“There’s been some crazy numbers people are throwing around,” Moorhead said. “But that’s fine, that’s their right to be able to do what they want to do.”
The competition for land can divide farmers. Kirian said the situation strains friendships.
“It does create a challenge where you know we’re all in pursuit of the same thing,” he said. “We all need ground to make our money. And there can be some hard feelings when people step on people’s toes.”
But Kirian said there are still plenty of established farmers willing to be mentors. And he said fostering relationships is essential to the young farmer getting his, or her, foot in the soil, so to speak.
“Maybe work for them a while and maybe eventually take over,” Kirian suggested.
Back on the other side of Findley, Eric Moorhead’s hard work and patience seem to be paying off. His landlord recently allowed him to buy into the farm’s expensive equipment. That’s a first step in building his asset base. Moorhead is hopeful he’ll own is own ground one day. And he’s pretty philosophical about it.
“Only whenever it’s supposed to happen,” Moorhead smiled.