Will Your Farm Survive The Next Decade?

The 2022 Ag Census confirmed what most farmers know all too well. Farms are getting bigger, growers are getting older, and land is as valuable as ever. What does this mean for your operation and growth playbook going forward? What steps can you take to keep farming in the next 10 years? Let’s dig in.

The last 10 years have been marked by “get big or get out”

Consolidation has accelerated over the last 10 years. While the total number of farms is down 7%, the number of operations with over $5M in sales nearly doubled to over 16K. 

Today, 16,226 farms account for over 40% of all farm sales. 

As summed up by Ag Secretary Tom Vilsack, “A combination of trade wars, the pandemic and policies that furthered a ‘get big or get out’ mentality pushed more people out of farming in the five years since the last Census, than in any other Census period this century.”

Expect consolidation to accelerate 

As farmers and landowners continue to age, expect the generational transfer of land only to accelerate. American Farmland Trust estimates that 370 million acres will change hands over the next 20 years.  

It’s never been more challenging to buy land

Farmers have never needed more capital to buy land. Rising interest rates, appreciated land values, and lower margins are making it harder for farmers to cash-flow new land deals. 

As highlighted by Howard Halderman in a recent Fractal blog, “Gone are the days of steady appreciation and low interest rates. Farmland values are up 40% while interest rates for land loans have increased by 4% since the summer of 2021.”

How can you best position yourself for the next 10 years?

• Know your game: Work with a financial coach, peer group, or lender to identify your growth goals, establish a growth time horizon, and understand the strength of your balance sheet.
• Build a capital plan: Tactically work with your lender to understand your financial position and the best opportunities for expansion.
• Consider accessing farmland equity capital: Farmers are increasingly turning to investor partners to access the capital they need and better compete for land.

Learn more about how to access the capital you need with Fractal, so you never pass on a land opportunity again – and keep growing to thrive in the next 10 years.

Note this is not investment advice. The information contained should be used for informational purposes.

AUTHOR

Harrison Rogers is the Marketing Lead at Fractal Agriculture