Young farmers face big challenges

Mark Richards farms and manages over 1,100 acres of crops, including sugar beets, cucumbers, corn, soybeans and wheat, along with tomatoes and sweet green peas for processing. He plans on taking over the operation from his father.

The baby boomer bubble is about to burst in the agriculture industry.

Over the next decade, a majority of existing farmers will retire and welcome younger farmers into agriculture. “It’s estimated that about $50 billion worth of farm assets will change hands in the next decade,” says Farm Credit Canada (FCC) President and CEO John Ryan.

As a young farmer and president of the Canadian Young Farmer’s Forum, Mark Richards understands these sorts of challenges facing young farmers.

Richards talks often with young farmers who want to enter the industry or expand their operation but face challenges such as using outdated technology and accessing capital.

“With high numbers of older farmers passing on their operations to the next generation, there comes a variety of challenges,” says Richards. “Older generations are generally more reluctant to embrace new technology, which leaves the younger generation having to catch up.”

But it’s this forward-thinking mentality of young farmers that he believes is the key to sustained profitability in the industry. “The commodity-based mindset that has existed in North America for many years is rapidly changing,” he says. “Farmers who experience real success are those who think further down the value chain.”

Technology isn’t the only major issue facing young farmers, he says. Access to capital is a concern for many who want to enter the industry or expand their operation.

”For young farmers, this creates a challenge,” Ryan says. “While one generation needs to create value from their assets to retire comfortably, the younger generation can’t afford to finance the full value of the farm. Large down payment requirements and difficult cash flow are major issues for young farmers.”

Richards worked with FCC to develop their new Accelerator Loan to help young farmers access capital. "With as little as zero down and interest-only payments on part of the loan, this loan gives young farmers an easy way into the industry," Richards says.

As a buyer, this loan allows you to build up equity a lot faster in the beginning – to purchase new equipment or technology – and still gives the seller the guaranteed cash he needs to live and a little bit extra. “It really is zero down for the buyer and zero risk for the seller,” notes Ryan.

Larry Parrott, a farm advisor with the Canadian Association of Farm Advisors, as well as being a farmer and owner of Prospect Management Resources Ltd., agrees with Richards. “It’s exciting,” he says, “it's going to meet a number of needs to help transition family farms from one generation to the next.”

So how did Richards become such a subject expert? He’s simply a huge advocate of training and furthering his education. “Knowing your options is the greatest tool for ensuring a long and successful career in this industry, “ he says. And he should know, in a typical year he’ll attend 10 days of agronomic training sessions, five to 10 days on business management seminars and four to six days of training to further his leadership skills.

Parrott also believes that management training is crucial for the future success of young farmers. He says that’s what makes the Accelerator Loan truly beneficial. “The loan isn’t just another financing option available to young farmers, it’s more of a total package that will help increase the success of those using it. Buyers who use the Accelerator Loan will be offered AgExpert Analyst farm management software and AgriSuccess management-training workshops to improve their management skills – all at no charge.”

Sellers who use the Accelerator Loan aren’t left out either. They will be offered complimentary AgriSuccess management-training workshops relating to succession and estate planning.

But even with the right management training and proper tools, Richards says young farmers need to realize they can’t expect their parent’s success immediately. “Your parents have been farming for 30 or 40 years, so you need to respect the time and effort that goes into being successful,” he says.

To learn more about the FCC Accelerator Loan, call 1-888-332-3301 or visit www.fcc-fac.ca.