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market-farming - Re: [Market-farming] sobering but possibly stereotypical article?

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  • From: Richard Stewart <rstewart AT zoomtown.com>
  • To: Market Farming <market-farming AT lists.ibiblio.org>
  • Subject: Re: [Market-farming] sobering but possibly stereotypical article?
  • Date: Mon, 21 Nov 2011 11:14:37 -0500

Here in Ohio we have Ohio Farmland Preservation.
http://www.agri.ohio.gov/farmland/

It is run by the ODA and a lot of this year's conference was talking about
budget cuts and how they might impact farming at large. We were up there on
Thursday doing a session on Growing the Small Farm Business. Talking with a
bunch of folks in breakouts and at lunch I can say there are a number of
farms that are taking land and placing easements on them requiring them to
stay farmland. We have done similar things on our farm but have gone the
environmental easement route. Placing 1/3 of our acreage into the protective
category. They are similar but have different restrictions. For instance,
you can still drill for gas on Farmland ground but you would not be able to
on environmental protected ground. Both can be used to continue farming.

We have also interviewed by Indiana State University on farmland/family
transitioning in part because we have in place the tools for transitioning
the farm from generation to generation.

Not being the one that actually owns the farm is the major problem. To
compound the problem, farmland has become more valuable both in actual per
acre price as well as rent prices. In addition to all of that the ability to
attain business loans is REALLY rough, especially for those that do not
already have a huge amount of equity. Our farm would take short term loans
for a single year to get good deals on building barns or the purchase of a
single piece of equipment. This is becoming more difficult or impossible.
We are a farm that is in the black with zero debt, lots of equity on
equipment and 300 acres of land, and solid cash flows and we still have
problems.

One thing I would advise is to open a dialogue now and get something written
down that is legally binding, regardless of what form it comes in. Avoiding
it will cause problems in the future as well as gnaw at you and be a source
of emotional hardship.

Off topic and on a related note:

An interesting thing is the price paid per acre at the end of the story.
7000.00. The State recently paid more than that for property, FLOOD PLAIN
property, at the end of our farm. That drove up property values of property
that CANNOT be developed and our property tax increased because the value of
the land was increased by the purchase by the government.

Which leads us into the abstract value of farmland.

Right now our conventional crops are grossing about 1000.00 per acre. Our
non-certified organic land is grossing about 4000.00 per acre. The sad thing
is, we actually keep more money off the conventional ground due to less
labor. That said, the only reason why that is so currently is because the
amazing per bu payout for conventional grains and beans. Even at the lower
price of 11.00/bu the amount of money farmers are getting paid compared to
five years ago has more than doubled in some cases, which have a huge impact
on the topic above.

It would take us a decade to recover the costs of buying land at 7000.00 an
acre at current crop rates. If the market would drop that has a HUGE impact
on that investment.





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