Consumers definitely like the idea of a small family-run farm. It gives them a feeling of things well-cared for, and they relate better with such operations because they feel it still has the human scale they feel has disappeared in all sectors of life. Governments and industry are also rather adamant to maintain the family status of farms, as it resonates with the general public. With the many changes ahead, what future will family farms face?
A turn of generations
In most parts of the world, farmers are getting old, in their high 50’s. In many countries, the current generation of farmers is expected to retire within a decade. A number that is often mentioned is that about 50% of farmers will reach retirement age in 10 years from now, in 2035. Here in Canada, I have even read the number of 40% within 5 years.
Of course, this presents a major challenge. Replacement is needed. The question is who will and who can take over the farms. Perhaps, the most difficult challenge for new farmers is to be able to buy a farm. Agricultural land prices have increased strongly over the past two decades and farms have become unaffordable to many farming candidates. One of the reasons behind the price increase is that agricultural land is now seen as an investment by people who have no connection or activity in agriculture. Aspiring farmers cannot compete with Big Money. Then, what is left to them?
Of course, one must buy only what one can afford. This could mean that new farmers might have to settle for less land, but can it be economically viable? The type of ownership -and owner- might also bring a new type of farming structure. There will be land owners who farm. Others will not farm the land themselves. The ones working the land might not be owners, but rent the land. It is easy to imagine all sorts of constructions between ownership and actual physical farming depending on how the money flows. As such, this is not new. In all times, there have been large land owners who would not do much of the actual work. There also always have been people farming the land based on a lease contract, or remunerated on what they produce from the land they work. The difference now is that the turn of generations also comes together with the end of the farming family that established the farm.
For very long, farms have been transmitted from parents to children. This is not going to be quite the case in the future. Many farmers’ children have chosen different career paths. They are simply not attracted by the farming life, for various reasons. They have decided to leave agriculture and have a life somewhere else. In many cases, this leaves the parents with no successor. On the other hand, a substantial number of aspiring farmers are not from farming families. They come from the cities, but they want to get into agriculture, also for various reasons. The question that comes now is: how to organize the succession? And that is not an easy process, especially from a psychological point of view.
South Africa - A MASTER PLAN WITHOUT FARMERS
A difficult transition?
For farmers, especially those who come from families who have owned the farm for generations, this feels like an end. Often, the idea of accepting to pass the farm on to a total stranger is not easy. From numbers I have seen in Canada, it appears that initiating a succession process is something that the men rarely do. The farmers’ wives are the ones who generally start the process. Let’s face it, letting go of a farm is a heavily emotionally loaded moment. For potential buyers, the main problem is of a different nature. The most important for them is to have a solid project. That is not easy, either.
Depending on all the different situations, many outcomes are possible for how farm ownership will look like in the future. What will the new farmers be looking for? They can choose for a smaller size and focus on niche high-margin productions. But they also can choose for large efficient commodity farms if they can finance the purchase, unless they would do that as tenants paying a rent to the non-farming owner. Everything is possible. What matters the most for the future is that farmers make a decent living out of agriculture. That has always been a challenge everywhere in the world, and it has always been a challenge at any time in history. Economic viability will determine what the farms of the future will look like and what they will produce. Future business models will be key. Of course, another question that may arise is whether all the farmland that is to change hands will find a farmer. If not, what happens to the land, and what happens to production volumes?
What is a family farm and its future?
The discussion of the farm size is going to happen, one way or another. Just for illustration, here are some statistics from the USDA / National Agricultural Statistics Service: in 2022, family farms represented 95% of all US farms. Small family farms made up 85 % of all farms. They represented 39 % of the farmland and accounted for only 14 % of the value of agricultural products sold. Midsize family farms represented 6 % of farms and produced 16 % of total agricultural value. Large-scale family farms, though only 4 % of the total, generated 51 % of the value of all agricultural products.
Non-family farms represented just 5% of all farms but accounted for 19% of the value of agricultural products, so more than all 85% small family farms together. This shows another reality of agriculture, which is that the lion’s share of agricultural production comes from a minority of farms. If farms become too expensive for individuals, could it mean that the share of non-family farms will increase in the future, as being on a payroll would be an attractive alternative for aspiring farmers?
The general public may love the idea of small family farms but to feed the world, large farms play an essential role. My point is not to say whether it is a good thing or a bad thing. Reality is just reality. If we want to solve challenges for a successful future, we must not delude ourselves in a romanticized idea of agriculture, but we must make sure that agriculture does a proper work to keep doing what it is supposed to do. I have a video on YouTube in which I discuss whether the farm size matters or not. In my opinion, size does not matter, and neither should the type of ownership. What truly matters is that, regardless of size or ownership, farmers do a good job. Skills and ongoing training are essential. Of course that includes quantitative aspects (volumes, yields, etc.) but also qualitative aspects, such as minimal environmental impact (all human activities have an impact) and sustainability.
Further, what is a family farm really? As I mentioned in the introduction, everybody is a strong supporter of family-owned farms, but the reality is a bit more complex than just who owns the land and the buildings. Family-owned does not necessarily mean independent. It is not the same thing. I know that this is a sensitive topic, especially considering the difference in size between farms and their business partners. It feels like David vs. Goliath. The romantic idea of the farmer holding an ear of wheat in his mouth, happily living off the land without pressures from the rest of the world is a nice one but, once again, reality is different. A farm cannot be isolated from the production and supply chains. These chains are quite sophisticated in their organization to ensure that products find their way to the consumers because, well, that is the purpose.
The farm may be owned by the farmer but it also says nothing about all the contractual relationships that exist between the farmers and the other players in that chain. This might become even more prevalent in the future, as some agribusiness companies are already looking at helping young farmers to get in the saddle. Making sure that there will be farmers in the future is quite essential for the rest of the value chain partners. Without farmers, they do not have a business. That said, the help will not be without conditions. Future farmers who can get in the business will likely be bound contractually with the company that provided the support in the first place. it would be unlikely that businesses would bring financial support to see those farmers go to a competitor.
What the future will bring for family farms will depend greatly on government policies. What will be their idea of their respective agricultures? How do they see the future of their rural areas? What role will they want for their agricultures to play in their economies and in geopolitics, or just politics? These are some of the many questions that will have to receive answers and the place of family farms will depend on the answers.
