Rural America conjures up different images for different people. Some picture the land itself, while others imagine how they’d use it for agriculture or to enjoy a rural lifestyle.
Demographers also think about who rural America is.
- Every five years, the USDA’s Census of Agriculture provides a detailed view of the people operating farms and ranches. As the latest census in 2012 shows, operators are diverse in age, experience, size of operation, gender, race and ethnicity:
- Farmers and ranchers have an average age of 58.3, and 61 percent are 35 to 64 years old.
- Nationwide, 25 percent are beginning producers, defined as those operating for less than 10 years.
- The majority of producers have small operations; 57 percent sold less than $10,000 in agricultural products in 2012.
- Women represent 30 percent of total farm operators and 67 percent of secondary operators. Texas has the most women farmers of any state.
- The census counted more minority-owned farms in 2012 than in 2007, including 21 percent more farms owned by Hispanic principal operators.
The Farm Credit Council is one organization taking a close look at the Ag Census. With a mission to serve agriculture and rural America, Farm Credit lending cooperatives finance all kinds of agricultural producers, including young, beginning and small producers, contributing to a steady supply of farmers and ranchers for the future.
“Farm Credit is the largest lender to young and beginning farmers in the U.S.,” says John Hays, vice president for policy analysis and development at the council, in Washington, D.C.
An agricultural economist by training, Hays analyzes Ag Census data down to the county level, looking for patterns by region, acreage, commodity and other variables. Those snapshots of America’s ag producers help Farm Credit lenders ensure that all eligible, creditworthy producers have access to financing.
It’s possible that rural America is even more diverse than it appears in the census, which collects forms from about two-thirds of ag producers and makes estimates about the rest. For example, a beginning cattle producer who didn’t receive a form might be different from a longtime rancher who did.
“Using accepted statistical techniques, one just has to assume that those who weren’t surveyed have the same demographics as those who were,” Hays says. “I think there’s a good chance that their demographics are quite different, which would increase the proportions of females, minorities and younger people.”
A closer look at the data is already shedding new light. Despite recent headlines about aging farmers, data show that their average age has actually decreased in many areas, most noticeably in a strip from the Dakotas to Texas — including 47 of the 254 counties in the Lone Star State.
There are some things even good data can’t explain. Another way to learn about landowners and ag producers, Hays says, is to get the perspective of a local Farm Credit lending cooperative.
Programs help people enter agriculture
Jay Stewart of Capital Farm Credit, which covers 192 Texas counties, has noticed people thinking about buying land and having more discretionary income at a younger age now than 10 years ago.
To assist young, beginning and small operators, Farm Credit lending co-ops offer innovative educational and lending programs, such as flexible underwriting standards.
“For many, the difficulty is not so much the cost of capital as it is just having access to it,” says Stewart, senior vice president and chief lending officer at the Bryan-based cooperative. “Let’s say they’re short on net worth or liquidity, or their income may not meet the usual standards. As long as they have good character, high quality of management and a sound plan, we’re willing to take more risk for those wanting to get started in agriculture.”
Loans to young, beginning and small operators have been on the rise at Legacy Ag Credit, which serves 10 counties in Northeast Texas.
“We see more young people diversifying their income sources by living in a rural area and maintaining a cowcalf operation alongside their wage-earning job or longterm career,” says Joseph Crouch, CEO of Legacy, headquartered in Sulphur Springs. “In some cases succession
plans, such as the transfer of ownership of agricultural property or an ag enterprise from one generation to the next, are being executed.”
Beef cattle are often what buyers put on their land first, say the lenders, who finance livestock in addition to land, rural homes, equipment, ag operations and agribusinesses.
“Young and beginning operators in our area most likely have a cow-calf herd, yearling or hay operation,” says Crouch.
Urbanites who own rural land or a second home in the country and who want something smaller than a cow-calf or hay operation sometimes raise niche market crops such as blueberries or vegetables, he says.
Those observations align with the Ag Census, which found that cattle and calves; poultry and poultry products; corn; milk; fruit, tree nuts and berries; and hay and other crops are among the top 10 commodities for beginning farmers.
The Farm Credit Council has found some interesting patterns in the USDA Ag Census results, such as 495 counties (green) where the average age of farmers and ranchers decreased, particularly in the country’s midsection.
Tools tailored for beginners of all ages
Ag operators don’t have to be young to be beginners.
“We have found that there are quite a bit more beginning farmers over the age of 35 than under,” says Hays of the Farm Credit Council.
It will take more analysis to understand what’s driving that trend, but local lenders say that many first-time land buyers already have well-established careers. Often, they are buying land for rural living, future retirement or investment.
“A significant portion of our business is from metropolitan areas,” says Stewart. “For many buyers, land represents an escape from a busy lifestyle or a return to rural roots.”
Military veterans who are starting new careers in rural areas are also adding to the ranks of beginning producers.
Stewart tells the story of a customer and former U.S. Army Ranger who wanted to raise cattle after serving in Iraq and Afghanistan and using the GI Bill to go to college. Without the typical financial history required for a loan, he was turned down by a few banks before a friend referred him to Farm Credit.
“Helping people succeed in agriculture is why Farm Credit is here,” Stewart says. “His sound plan and character qualified him for financing as a beginning producer. He now raises Wagyu cattle and sells beef directly to restaurants and consumers.”
Whatever their reasons for buying land or running a small ag operation, for beginners, education often starts with their loan officer.
“Our relationship with our borrower is the most important aspect of our business,” Crouch says. “Working hand-in-hand with them on a frequent basis allows us to help them not only understand their goals, but also the process to reach their goals.”
Farm Credit cooperatives also offer resources such as farmmanagement software, educational workshops featuring industry and university experts, and leadership programs for youths and young producers.
Low rates create opportunities
One factor that is opening the door for many who want to enter agriculture and buy or refinance land is the current low interest rate environment.
“The ability to capture long-term interest rates — specifically when rates are at an all-time low — is a valuable tool Farm Credit is able to offer,” Crouch says.
Farm Credit has a funding mechanism that enables borrowers to lock in those low rates over a long term, he explains. By comparison, liabilities price more often than earning assets at commercial banks.
As a result, many bank loans reprice or require a balloon payment after three or five years.
“I promise you, there are enough things to think about at an ag operation,” Crouch adds. “Interest rate risk should not be one of them.”