Could I Ever Afford to be a Farmer?

Farming can be very capital intensive.  Said another way, you may very well need to have a lot of money up front to start farming.  When I was in college, this idea haunted me.  I really wanted to farm, but was it even possible?  How could someone with a net worth of approximately $500 and no income stream to speak of afford to buy property, buildings, equipment, animals, and supplies to begin farming?

To a great degree, I was trapped by a rigid mental paradigm from which I could not break free.  I had the idea that I needed to buy all of these things to start farming.  I had the idea that the only way I could buy these things was by borrowing.  I was also convinced that the only way I could qualify for a loan was if I could prove that I didn't need the loan by having adequate assets to act as collateral.  I remember at the time, the cheapest dairy farm I could find was being offered for $250,000.  At the time, a good starter home was selling for $60,000.  I was nowhere near close to qualifying for a starter home, so how could I possibly qualify to buy a $250,000 dairy farm?  This thought weighed heavy on my mind.  Inflation has taken its toll, and now those numbers seem almost trivial, but the relationship still exists.  In this neck of the woods, a nice starter home is probably $180,000 or so and the smallest dairy you could find in the area is probably $1,000,000.

                                 

After much mental anguish and hand wringing, I came to the conclusion that as a young man without inheriting a farm, there was no realistic way for me to be able be a farmer on my own farm.  I was not interested in spending my life as a farm laborer, working for other farmers.  The idea of being a full-time farmer began to slip away.  I was conceding defeat.  I began to think of my "farm" more as a lifestyle or self-sufficiency type "homestead" or farmstead.  My future farm would be to provide for the needs of my family.  I began thinking that my farm would grow great food, sustainably, probably not for sale.  I would enjoy the diversion from my unknown career path, and I would still be able to help my kids see the joys, struggles, and benefits of farming.

This moment was a tough one for me.  On one hand, I felt as if I was giving up.  On the other hand, I also felt like I was acknowledging the reality of the situation.  I saw this as one of those "grow up" moments most of us have as we reconcile dreams and reality.  I would not seriously consider the writings of Thoreau until much later in life, but one quote from Walden that has struck a chord with me was this, "The youth gets together his materials to build a bridge to the moon, or, perchance, a palace or temple on earth, and, at length, the middle-aged man concludes to build a woodshed with them."  Was I getting prematurely old?  Was I giving up on life and lowering my expectations to a low goal with a high probability of easy attainment?  These were all questions circling my mind as I came to this conclusion.

I have reflected on this decision many times over the past 30 years or so.  Life gives a person experience and perspective.  I have learned that the paradigm from which I made the decision I made about farming was naively constrained.  I made my decision with very little information.  I made my decision with very little perspective on the various factors that would impact my ability to succeed.  That said, that same lack of perspective would likely have led me to follow a path in farming that had little chance of ultimately being successful.  Commodity dairy farming, or commodity farming of any kind for that matter is a very tough business.  The economics of commodity businesses dictate that only the very lowest cost producers have a chance of making even a modest living.  Most producers in the "perfect competition" market place either make no money or they lose money in the process.  It is quite likely that my view of the world would have forced me into a commodity market with no real hope of good success.  

                                    

With all that I have learned over the past decades, I would have gone back in time and had a good talk with myself.  I would have told myself several things.  It is foolish to finance yourself into farming from the get go.  You don't have to buy much of anything to get started.  You need to have differentiated products, commodity markets are for suckers.  If you can sell a differentiated product that some people appreciate, you can make money.  You need to carefully consider the direct marketing approach rather than selling into a commodity market or to market aggregators.  If you have direct marketing, you can earn the value of the difference between wholesale and retail.  Always make your product better than others, but do it smartly.  Good enough does not cut it if you want to make money and differentiate yourself.  Don't follow the crowd of commodity producers.  Evaluate what they have to offer, but look elsewhere as well when choosing approaches to production.  Seek the most efficient production options that employ the least amount of capital investment.  When starting a farm, gain experience, then seek to lease property to do your own farming.  Farming is not about owning property, but owning property can be the result successful farming.  The goal is to farm with passion, integrity, and joy, not to own property.  But owning property is cool too.

In retrospect, knowing what I know now and understanding the paradigms I was trapped in, I probably made the right choice.  I do sometimes wish that I could have gone back in time and given myself a good lecture and helped to ease myself out of my confining views of the world.  We are where we are and the experiences I have gained over the years have helped me frame my much more modest goals for the future.  I look forward with great anticipation and hope.