Future heads of family farms dig into financials
COLUMBIA, Mo. (AP) – Jake Anderson didn’t have to delve too deep into the University of Missouri’s agricultural economics program before realizing he was destined to return to the 1,500-acre family farm. After all, that’s been the Anderson family trade since 1891, when his great-great grandfather came to Callaway County from Sweden.
What the self-described ”farm kid” was less certain of was how to manage a volatile business where market price fluctuations are common, the weather is unpredictable and long-term planning – at least for his parents and their parents – often meant scratching out financial estimates on a yellow legal pad or the back of an envelope. So, each Wednesday in the just-concluded spring semester, Anderson and a dozen other Missouri students crunched numbers in a campus computer lab, the male students’ agrarian roots betrayed only by baseball caps sporting farm equipment logos.
The focus on data is intentional: While other classes teach ag students how to repair combines or learn the proper chemical mixes of common fertilizers, students in agricultural economist Kevin Moore’s ”Returning to the Farm” class create business plans using financial information from their own family farms. It’s an approach more commonly found at the county agricultural extension office or in community college classrooms rather than flagship public research universities.
Moore says the skills are essential for the next generation of farmers for whom technology is second nature, but bringing their elders on board remains a challenge.
”For a lot of the students, the first time they actually get exposed to the real financial numbers on the farm may be through this class,” Moore said. ”Generally, Mom and Dad try to make everything rosy for the kids. … For many, it’s really their first honest exposure to the complete financial side of things.”
The necessity of having those conversations will only increase. The U.S. Department of Agriculture says the number of U.S. farmers older than 65 grew by nearly 22 percent between 2002 and 2007. Farmers 75 and older outnumber those under 25 in the country 5-1.
Anderson, a 21-year-old junior, returns to the farm that’s 30 miles east of cam
-pus on the weekends to help out. When it’s time to harvest the rows of soybeans and corn, he makes the same trip three to four times weekly. He also sells corn from his own small patch of land at a roadside stand in front of the family home, a part-time summer job he’s done since he was nine that helps pay for college.
After graduation, he hopes to add 50 to 100 head of cattle and grow the family operation by another 500 acres, as well as sell seeds for supplemental income. He said Moore’s class has given him the financial tools to support that decision.
”In high school, I didn’t expect to get back on the farm. It seemed like times were getting tough,” Anderson said. ”And at Mizzou, I saw all these other farm kids who couldn’t come back. But this is what I’ve grown up doing, it’s what I have a passion for.”
Dale Nordquist, associate director of the Center for Farm Financial Management at the University of Minnesota, said Missouri’s practical approach to understanding farm finances is relatively uncommon at large, land-grant universities where both students and professors are more likely to concentrate on theoretical approaches as opposed to practical solutions, and the use of personal data can still be seen as an intrusion.
Beyond the nuts and bolts of finances, he said such training can serve an equally valuable purpose: It forces farm families to prepare their sons and daughters to take over the business.
”You certainly hear the stories about the older generation that never really wants to let go of the reins,” Nordquist said. ”Even though they might be going through the motions of letting go of the kids, they never release (control) of management. So they keep on doing the same thing … Maybe they don’t ever step back.”
Garrett Riekhof, a Higginsville farmer and 2003 Missouri graduate who took the class a decade ago, said the course marked the first time he took a hard look at the business side of his family’s operation.
”A farm is more than how many dollars of seed you have in the ground each year,” he said. ”These are business practices that any small business needs to go through to assess their health. I like to run my farm just like any small business would.”
For some, the statistical approach could lead to a disheartening conclusion: The family farm may not survive another generation. And other students’ parents remain resistant to opening the family’s books – even to their own progeny. In those cases, Moore encourages his students to ”use me as a scapegoat.”
Anderson’s parents, though, were more than happy to hand over the books, and now their son shares his newfound insights into estate planning, asset transfer and other financial management details.
”I’m very proud he wants to come back, but I wanted it to be his decision,” said his father, John Anderson, 53, whose three daughters also attended Missouri but pursued other professions.
”Technology is taking over agriculture just like it’s taking over the world,” John Anderson said. ”And he’s getting it firsthand.”