The following was adapted from a speech Doug Stark, our president and CEO, made to young and beginning producers at the Progressive Farmer’s Ag Summit in Chicago.
We all know that agriculture is laden with risks, and managing them is a critical part of what producers do every day. But to manage risks you must actually take risks. That’s not always easy for young and beginning producers, particularly when it comes to one of their biggest hurdles – access to land.
At one of our annual Side by Side Conferences for young and beginning producers, three of our Directors – two of them still relatively young – were asked what they would do differently if they could go back and do it again. “Buy more land,” two of these successful farmers responded.
When I visit our customers, I hear this same regret. With great pride, customers show me their operation, its evolution and the land they added.
Then, inevitably, they point to the tract they should have bought.
Passing Up Opportunities
Now, I’m not encouraging producers to throw caution to the wind and plunge into debt to buy every piece of land for sale. Rather, the lesson is that these producers had opportunities they didn’t take and, with hindsight, recognized that they could have made them work.
Taking risks is foundational to growing your operation, especially for young producers. The key is to understand the risks and the steps needed to manage them.
Consider a drive I took with one of our Directors. He had a nice start on his operation and wanted me to see an adjacent tract. If he wanted to own it, he told me, he would have to pay a record per-acre price for his county. Understanding his apprehension, I posed a series of questions:
• How long will you own it? “Forever,” he said.
• Where will land prices be in 30 to 40 years? “Probably higher,” he acknowledged.
• Can you make the payments? “Yes,” he said.
• Even under two to three years of adversity? “I think so,” he said.
There were additional – critical – facts we didn’t explicitly cover that day, including his cost of production and how the new purchase would affect his fixed and variable expenses. He understood his financials, with and without the land purchase.
Commit to Your Goals
Other young and beginning producers will come across their own land opportunities in the next couple of years, either as the result of producers retiring, adjusting their operations or deciding to exit the business.
Also, some non-farming landowners looking at higher interest rates and declining land values will decide this is a good time to sell, and leased land will change hands as agriculture searches for a cash-rent balance.
Prepare yourself for these opportunities by asking: “What would it take if I . . .”
• had to buy the farm I lease?
• could add another lease to my operation?
• wanted to double my operation in five to seven years?
After you identify how you can position yourself for opportunities, take the next step. Commit to your goals. This might mean doing things differently, sitting down with a broker to devise a better marketing plan or developing relationships with trusted advisors.
It has never been easy to get started in production agriculture. But I’d offer that despite today’s challenging conditions, there are going to be more opportunities than ever.
This is an exciting time to be in agriculture.