The Next Lost Generation
Nine members of Greg Wade's high school class started farming after high school or college in the mid-to late 1970s. Today, the 53-year-old from Stewartsville, Mo., is the only one left. "The ‘80s took the rest out,” he says. "There's nobody out here like me anymore.” A large part of an entire generation was lost from farming since the early ‘80s, and I predict that will be the primary driver of the consolidation we'll see the next 10 to 20 years.
There are even fewer farmers 40 years and younger (that generation's children) to take over. And as John Phipps pointed out in his Spring 2008 Perspective
column, we don't need as many.
By the time I retire (when I'm 85, based on the recent stock market and my IRA performance), technology will allow farmers to farm acreages we can't fathom even today. With fewer children of the "lost generation” left to take over, coupled with technology and competition, the rate of consolidation will accelerate beyond comprehension.
Farmers will, in essence, buy other farmers out as the lost generation retires. Land values will continue increasing, though they may see a brief plateau due to the recent commodity drop. Those who want to expand, however, will stay aggressive, while a certain number of farmers just won't pay $300-plus rents or $8,000/acre purchase prices for ground.
These prices, justified or not, force farmers to compete with those who will pay more. They'll stay the size they are until they retire or until another farmer works out a new deal with the landowner, forcing the current tenant to pay more. As this generation moves on, younger and more aggressive farmers wait in the wings.
People will argue you can't survive paying crazy rents or massive acquisition prices, but that same argument persisted in the ‘80s. Many did go broke, but others expanded. Today, too, some will go broke and there will be "I-told-you-so's” from those who won't pay high rents or purchase prices.
But rest assured, somebody down the road will pick up 5,000 acres when a farmer in the next township goes under. Another will pay an extra $50/acre cash rent for 500 acres, and will make it work—even at outrageous levels.
There are very interesting, and scary, times to come.
Top Producer, November 2008