By Kindra Gordon
"I think it's a better time to get into farming and ranching today than it was five years ago." That's the bullish optimism of David Kohl, a revered ag economist who speaks to ag industry and producer audiences across the country. Kohl was in South Dakota the week of September 11, 2017 and shared his outlook for agriculture.
Kohl, who is a professor emeritus of agricultural and applied economics from Virginia Tech where he taught for 25 years, also speaks from real-experience. He is co-owner of a large dairy based in Virginia.
So why does Kohl suggest now is a good time to get into farming or ranching – or expand an existing operation?
Kohl shares one big statistic – 60% of U.S. land will turnover ownership by the year 2030 because of the aging demographic of current landowners. Additionally, he notes that 20% of family farms have no next generation returning to the operation, which spells opportunity for those looking to get into the business.
He also cites the current low interest rates and the drop in machinery and equipment values as two core reasons providing opportunities to get into ag. He notes that some machinery values are down 20-40%. Likewise, he notes that today many producers are finding ways to farm and ranch with less machinery, which decreases operating expenses.
Kohl credits new producers with being savvy about collaborating on assets and talent sharing, which also provide a means for getting into the business with less expense.
For new and expanding producers, Kohl emphasizes that in today's marketplace there are opportunities for all sizes of operation. "There is no one size fits all. You don't have to have 300 cows or a certain number of acres," Kohl says. He notes that the younger generation is finding creative ways to market, multi-task and create various revenue streams.
With regard to size of an operation, he tells of a farmer in Tennessee who made the decision to let go of several thousand acres of leased land. Instead, he chose to focus on enhancing production of his higher producing land – and now measures his profitability by field to track his margins. In this example, the producer is generating as much income and has more time for his family because he refined his focus and production.
Kohl points to niche markets for food and ag products as opportunities for producers as well. As an example, in the dairy he owns with partners, Kohl says they've created markets for egg nog and ice cream, which bring more value than milk. Similarly, Kohl sees revenue opportunities in agriculture by attracting visitors from tourism or selling products online.
Lastly, Kohl says one of the best reasons to get into farming and ranching is that it is still one of the best livelihoods in which to raise a family.
College advice
For students at the crossroads of preparing for college choices, Kohl, who comes from the world of academia, has some strong opinions. Foremost he says, "College tuition is getting out of hand. Many schools have too many administrators and fancy buildings. Vocational and technical schools can be very appropriate for some students. The important thing is to get a skill."
No matter where a student goes to college, Kohl says, "You'll only have five good professors in your lifetime; learn from them." He also advises, "Find the right group of people and influencers to spend time with." He advocates setting goals – and writing them down.
Regarding internships, he advises having at least one within the U.S. and one on the international level. He also recommends that the younger generation work away from their family business for a few years to gain experience – and make mistakes – somewhere else.
To students still in high school, Kohl encourages participation in FFA, and of his own personal experience says, "FFA was the best thing that ever happened to me."
And to all students, he cautions about using technology judiciously. He shares, "On average people check their phones 138 times per day. That's too much."
While Millennials have been talked about a lot in the news, and are 83 million strong, Kohl is optimistic about the Gen Z segment. They were born between 1995 and 2012, are 70 million stong, and he says they are the next generation driving consumer, political and economic trends.
"Gen Z has old timey work habits because they saw their parent lose money. And, they relate better to Baby Boomers than Millennials."
Finally, to family operations bringing an old and young generation together to operate a farm or ranch, Kohl advises finding balance. He tells that if the mentality is that things need to be done the way they've always been done, or if no investments are made in the operation, it sets the next generation behind.
To this, Kohl says, "An operation needs some institutional memory, but it also needs some new ideas." He gives the analogy of putting a pup with an old dog. Kohl says, "Either the energy picks up, or it kills it – the same happens in an operation. So find a balance with new and old."
