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.
When asked what they would do differently if they could go back in time, many producers will respond, “Buy more land.” They often can point to the specific tract they passed up. For some, the regret comes from realizing in hindsight that they could have managed the risk.
Passing Up Opportunities
This doesn’t mean throw caution to the wind and plunge into debt to buy every piece of land for sale. Rather, know that taking risks is foundational to growing an operation. This is especially true for young and beginning producers.
The key is to fully understand the risk you are taking and the steps needed to manage them. Consider this conversation with a young customer who had a nice start on his operation and had the opportunity to buy a tract adjacent to his farm. To buy it, the young producer would need to buy a record per-acre price for his county.
- 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 to be considered, including his cost of production and how the new purchase would affect his fixed and variable expenses. But he first needed to get comfortable with taking a risk.
Commit to Your Goals
Other young and beginning producers will come across their own land opportunities. Be ready 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 even in challenging conditions, opportunities will come along.
Are you ready?