As the average age of farmers in the U.S. continues to increase, some policy makers contend that we need to pay attention to how younger farmers can afford to become established in farming if land prices continue to increase, while profits are somewhat flat-lined. Farmland ownership has received increased attention from U.S. lawmakers over the past couple of years, especially concerning land being purchased by foreign-owned companies. Laws passed in several states over the past couple of years have limited foreign land ownership from countries like Iran and China, often claiming these buyers drive up the price of farmland while creating potential security threats and pushing out family owned farms. But U.S. Agriculture Secretary Tom Vilsack has called this focus misguided, since he believes that growth in American investment firms buying farmland is a more pressing concern. At the North American Agricultural Journalists conference in April, Vilsack contended that a third of all the farming operations that generated more than $500,000 in sales are owned by investment firms. There are also reports that firms such as Farmland Partners, PGIM and Gladstone Land, are buying land at top of market prices and reselling some of those properties at amounts as much as five times higher than regional average prices., which obviously blocks young farmers from buying farmland. The American Farmland Trust contends that population growth expanding into rural communities has increased farmland prices, as 11 million acres of agricultural land were converted into residential properties from 2001 to 2016. Also, the move to wind and solar energy, often backed by government subsidies, has resulted in rising cropland rental rates and increased farmland prices, which makes it harder for young, beginning farmers to find profitability when starting a farming career.
Last week’s USDA National Pasture and Range Conditions report pointed out that many states saw a downturn in range and pasture conditions for the week ending on August 18th. Surveys show that 20 of the contiguous 48 states saw a decrease in grazing areas rated good to excellent. But Colorado and New Mexico showed significant improvement, and Utah’s rating of 96% good to excellent ratings for range lands was the best for all of the states in the U.S.
According to USDA, the number of U.S. beef cows have decreased over the past five years to its lowest point since 1961 at 28.2 million head, which was caused in part by the widespread drought that damaged pastures and lowered hay supplies, while driving up prices for cows, feed and other inputs. Now cattle producers need to decide whether they’ll hold back heifers this fall to rebuild their herds or to sell them as feeder cattle in a robust market. Some market analysts are expecting herd numbers to return to 2023 levels in the next three to four years if these market conditions persist, while others believe cattle numbers will continue to contract through 2027, while cattle producers continue to take advantage of high feeder cattle prices and while maintaining smaller herds. On the other side of this equation, market analysts report that beef packers lost nearly $100 per head throughout 2023 and 2024, and are on track to be in the red again next year even though feed costs are likely to be lower.
Henry Ford wrote, “A man cannot build a reputation on what he is going to do”
