High land prices are making it especially difficult for beginning farmers in the Dakotas to find land to rent or buy.
At current prices, "buying is out of the question," says Joey Hansen, Elk Point, S.D. He operates a small farm with his brother. It consists of some of the land that his father worked part time before he died in a farm accident.
Land prices and rents in the Dakotas are at all-time highs and competition for land is "fierce," says John Dhuyvetter, a North Dakota State University Extension specialist, Minot, N.D. "It's a pretty tough environment."
The renting situation isn't much better. Cash rents are more than Hanson figures he can afford, and fewer and fewer landowners are interested in share rents, which works best for them.
Doug Goehring, North Dakota ag commissioner, urges beginning farmers to be careful as they try to get started or expand their farms and ranches. Commodity prices could fall. Sugar prices dropped more than 60% last year on an oversupply resulting from U.S. production and imports from Mexico. It could happen to grain, too, he says.
Beginning farmers who buy land now, will have to live with high land costs for the next 20-30 years.
If commodity prices tumble, they could lose "a big chunk of their lives" and the ag industry "could lose some of our best and brightest," he says.
There is some good news for beginning farmers in the current ag economy, though, says Nate Franzen. He's the ag division president at First Dakota National Bank, Yankton, S.D.
Farming and ranching is profitable today. That wasn't always the case. In the 1980s, margins were extremely thin for many producers. You can grow your ag business without buying high priced land. "You have options," Franzen says.
Hansen is exercising one of those options.
He bought a tractor and strip tillage machine this year and is starting a custom strip tillage and variable rate fertilizing business.
Read about his and other beginning farmers' start-up strategies in the April issue of Dakota Farmer. You can find the online edition at www.farmprogress.com. See Magazine Online.