Part 5: Flush times draw newcomers to farming

  • Article by: MIKE HUGLETT , Star Tribune
  • Updated: July 20, 2012 - 8:26 AM

High crop prices are attracting a new generation, but risks remain.

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Mark Vogel, with his wife, Joanna, and children, farms with sister Melissa Hemmings, far left, and brother Ivan Vogel, right.

Photo: Brian Peterson, Star Tribune

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LAKE WILSON, MINN.

Mark Vogel grew up on a farm, went to school for farm management -- and ended up in the tire business. Farming just wouldn't pay the bills when he graduated 13 years ago.

But this summer, Vogel is out in the fields. The first-time farmer's corn is as tall as he is, although he's been waiting for a much-needed soaking rain. So have his brother and sister, also crop-farming newbies.

Raising crops has become much more attractive to a generation weaned on the idea that farming -- while a nice lifestyle compared to cubicle drudgery -- was an economic loser. These days, corn and soybean prices are perched near historic highs, and farmers are making record incomes.

That is drawing newcomers such as Vogel into the business, despite soaring land prices that have accompanied the agriculture boom. "The hardest part is trying to find something you can rent, and rent it at a price where you can actually make some money," Vogel said.

Younger farmers are competing with veteran farmers who themselves are scrapping to secure more land to capitalize on high commodity prices, bidding up rents in the process.

"I think we are seeing a paradox: There's more interest in getting in [to farming], but boy is it a hard thing to get started," said Dale Nordquist, associate director of the University of Minnesota's Center for Farm Financial Management, who's followed Minnesota agriculture for 30 years.

"I don't think I've ever seen this much competition for land on the rental market."

Average Minnesota farm rents rose 53 percent from 2006 to 2011, after increasing only 9 percent in the previous five years, according to U.S. Department of Agriculture data.

Farmers talk of making room for their children in the family business, after years of dissuading them from it. College classes in farm management are in vogue.

At Ridgewater College in Willmar, about 240 students are expected in the two-year agricultural degree program next fall, almost double 2006's enrollment. Most of them are studying farm management, preparing to run their own farms.

South Central College in Mankato currently has about 100 applications for its agribusiness program, compared with 65 a year ago, said Brad Schloesser, who's taught there for 20 years. "We are seeing the most interest ever in those two decades."

Doug Peterson, president of the Minnesota Farmers Union, said the revitalized interest in farming is a welcome sign. "You have to have new people to come into any business or industry is if it is to stay alive."

Farming could use new blood. The average age of a Minnesota farmer hovered between 47 and 49 1/2 from 1959 through 1992, USDA statistics show. Since then, it's been climbing, hitting 55.3 in 2007, the last year for which data are available.

A generation of farmers who weathered the 1980s bust and lean times in the 1990s tried steering their children away from the fields. Peterson described the usual advice, "Go get an education. Make money somewhere else."

Their kids often did, as Vogel, 33, can attest. "There's a lot of guys who would have gotten into farming, but their parents encouraged them to go to school because there wasn't much money in it."

Drawn to the land

Vogel went to school, but for farming. He got a two-year degree in farm operations management from Ridgewater College, and then figured out that indeed, farming economics wouldn't work. "It wasn't a money-making deal."

He moved to the Twin Cities, selling tires for Firestone. But he missed farm country life, the notion of seeing what you produce, the allure of sparsely populated open spaces. After a couple years he asked himself, "How many hours of my life do I want to spend sitting in a car?"

Vogel returned to Lake Wilson, population 251, in 2001. He still saw little potential in farming, so he opened Mark's Tire and Service, fixing cars and farm vehicles. It's been successful, a shop teeming with plus-sized tires and suffused with the staccato bursts of an impact wrench.

But Vogel kept an eye on farming, buying used equipment when he spotted a good deal -- a '79 International Harvester tractor here, an aging Wil-Rich cultivator there.

As commodity prices soared the past two years, he decided it was time to put a crop in the ground -- if he could get the land he needed. Fortunately, he had a family connection.

His father retired from dairy farming around 2000, and had been renting his 240 acres to a neighboring farmer since then. Not this year. Mark, his brother Ivan Vogel, 36, and sister Melissa Hemmings, 31, all started farming this spring, renting equal shares of their dad's land.

Ivan owns a landscaping and nursery business, while Melissa is a nursing home secretary who also raises goats with her husband. Like Mark, neither sibling plans to quit their day job, a recipe for marathon work weeks during planting and harvest seasons.

Mark, however, would like to eventually move into full-time farming, and he's diving in deeper from the get-go. In addition to his family's property, he's renting 125 acres of gently rolling cropland from a retired farmer he's known for several years. "I asked him, if you ever rent it, would you give me a shot at it?"

Vogel is open about his start-up finances, except for the rent he's paying. He doesn't want someone to move in with a better offer. "It happens all the time. People lose land."

Vogel's landlord could probably get more money from a resource-rich, veteran farmer. But he's "willing to help out a younger guy because that's the future," Vogel said. "Unless you can find somebody who rents for less than top dollar, there's no way a guy my age can get in."

Ivan Vogel said rental agreements are sometimes based on "more-than-business relationships" -- ties to family, friends and neighbors. "There's more of an understanding that rent has to be reasonable," Ivan Vogel said. In his part of the state, that means less than $200 an acre.

A lot of land is tied up in longer-term deals with rents in the $200-per-acre range, he said. Then there's land that turns every year or so, where owners are looking for top dollar -- around $300 per acre -- "the harsh open market," as Ivan Vogel put it.

The higher the rent, the more the risk. For younger farmers, the risk is often compounded by debt. If farming turns south in a big way, high debt burdens make financial failure more likely.

Minnesota's crop farmers on average had a farm debt-to-asset ratio last year of 41 percent. But for farmers under the age of 31, the ratio was 61 percent; for those 31 to 40 years old, 48 percent, according to University of Minnesota data.

"That's just what young farmers face -- they're definitely in a higher risk position," said the U of M's Nordquist.

Start-up costs

Farming is a capital-intensive business, and not just for land. It requires all sorts of expensive equipment, and farmers usually need operating loans just to put the year's crop in the ground. Mark Vogel estimated that getting into farming, at least on his scale, costs about $150,000.

Equity in Vogel's tire shop has helped finance his farming foray, and he's holding some debt on the equipment he's purchased, although not an onerous amount.

Ivan and Melissa carry operating loans to plant their crops. Both have worked out equipment-sharing arrangements with their fathers-in-law, both of whom are full-time farmers. Such relationships can be crucial for first-time farmers.

As good as farming has been, there's always the risk that the market is peaking. Mark Vogel is acutely aware of it -- "getting in right at the top of a bubble that goes poof. That's the scary part. You don't know. ... It's a calculated risk."

His brother Ivan was more blunt: "If you get in at the top, there's only one way to go." Down.

Star Tribune staff writer Jennifer Bjorhus contributed to this report. Mike Hughlett • 612-673-7003 mike.hughlett@startribune.com

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