Access to land and the ability to purchase it were rated as the top barriers to entering farming in a new survey released by the National Young Farmers Coalition and analyzed by the University of Wisconsin Survey Center. According to the survey, 59% of young farmers named finding affordable land to buy as very or extremely challenging, and 45% of young farmers named finding available land to buy as very or extremely challenging. The rates were higher — 68% — among farmers of color.
Stop subsidising farming and land will be cheaper….
Stop subsidising farming and land will be cheaper….
. . . but probably not used for farming.
There’s really not much else anyone is going to do with Iowa…..
Hunting and gathering before, wasn’t it?
Farmers of where?
And isn’t “getting rich” a process of humans getting *OUT* of farming? Why is there this obsession with desperately calling for help to impoverishise yourself? If you wanna scape an existence out of the dirt, go ahead, your choice, but don’t expect me to pander to you.
Stop subsidizing, and won’t farmers sell more and more into a falling market?
I assume farmers of color are running indigo plantations?
@PJF I agree with you. It looks as though spending too much time debunking elynomics can lead to confusing the current and capital accounts. Jim is probably chewing a carpet after finding this thread.
Bill Gates has been buying up huge areas of agricultural land in the States, but then I don’t suppose the price is of much concern to him…
Dave: I assume he would want a reasonable ROI on the deal, unless he wants to squander his squillions on rewilding the prairies. Cue the grizzlies!
So don’t be obsessed with owning the land, lads. There’s plenty of jobs for tenants and managers. Thanks to the IHT exemption there are plenty of rich landowners whose focus is more on tax efficiency than annual profit.
“Stop subsidising farming and land will be cheaper….”
No it won’t, not while a) there are massive tax advantages to owning farm land, and b) the State keeps printing money and spaffing it up against the nearest pile of bricks, meaning owning hard assets is infinitely preferable to cash.
Farm subsidies (which are being phased out anyway, in case you haven’t noticed from Portugal) were in the region of £90/acre ( a level that they had been at for 20 years) which with farm land costing £10k (ish) means you’re getting no more than a 1% return on capital. I doubt the likes of James Dyson and Jezza Clarkson were sinking their hard earned millions into land just for that kind of return.
https://publications.jrc.ec.europa.eu › JRC125220PDF
by E Baldoni · 2021 · Cited by 3 — The concern is that subsidies might be indirectly gained by non-farming landowners if they are capitalised into land prices. Although farmers are the main …
83 pages
The capitalisation of CAP subsidies into
land rents and land values in the EU
So it’s difficult to borrow a couple of million based on a speculative business plan, and (not made explicit) more so when you are <35 or POC. Something is seriously wrong. Crank up the MMT!
It’s not even that.
The issue is never that there’s no land available. It’s that there’s no land available where you are (so move) or it’s not available at a price you want to pay, or it’s more marginal than some other land (where I live you can get land for 1k an acre – but you’ve got to pay for wells or to dig canal access).
“The concern is that subsidies might be indirectly gained by non-farming landowners if they are capitalised into land prices. ”
Direct agricultural subsidies (ie cash payments to farmers) were introduced in the EEC in 1992, at a figure of around £100/acre, and in the UK land was (at the time) £1500/acre. The subsidy is now less than £100/acre (or was, as I said its being phased out) as over time various cuts were made, and in real terms £100 in 1991 is worth about £50 today, and yet land is now £10,000/acre. How do these facts fit with the theory above? Presumably land prices will drop in the UK as subsidies are removed entirely? And if they don’t will you accept the above is bollocks?
From 2008:
https://www.adamsmith.org/blog/tax-spending/the-rising-price-of-farmland
A report in The Times on how rural land values are soaring:
Farmers have seen their land values soar by 30 per cent in a year. With markets in turbulence and surging global food prices making agriculture profitable, land is now seen as a safe haven for cash and pension funds.
City institutions, led by Blackrock, UBS and Schroders, are setting up funds to invest in land and agribusiness. Other hedge funds are exploring the market. They are in competition with British farmers and businessmen from Ireland, Denmark and the Netherlands, where land is even more expensive.
Well, yes, but there’s something else going on as well, it’s not just the usual interaction of supply and demand. There’s subsidy as well.
The Common Agricultural Policy (spawn of the very devil that it is) has recently undergone some changes. Instead of subsidy being based upon production, it is now linked simply to the acreage (actually hectarage but forgive this traditionalist his little pleasures) of land held. It’s not quite in one leap though: over a period of years it moves from the historical amount based on past production to the flat per acre payment. That change is having its obvious effect: previously you had to actually farm the land, get something out of it. Now you just have to own the land to get the cheque.
That obvious effect being of course that the price of land will rise, as David Ricardo woud have pointed out. The subsidy is now simply an additional rent to the property, one which will simply feed through into increased capital values. It’s a little difficult to work out exactly what the subsidy actually is (come on, this is the EU we’re talking about) but £100 an acre or so looks like a reasonable estimate. Taking a 5% interest rate (or return upon capital, your choice) we would thus expect the subsidy to increase the value of land by some £2,000 per acre (ignoring the effect that the earlier subsidy system had on such land).
£3,500 Price of an average acre of farmland a year ago
£5,000 Price that an acre is close to fetching today
Ah. So, that’s what the CAP does, increases the wealth of those already owning land and making future farmers require more capital to enter the business. Not, perhaps, the desired outcome. Which brings me to my perpetual and oft asked question about the European Union itself.
Can we leave yet?
“Well, yes, but there’s something else going on as well, it’s not just the usual interaction of supply and demand. There’s subsidy as well.
The Common Agricultural Policy (spawn of the very devil that it is) has recently undergone some changes. Instead of subsidy being based upon production, it is now linked simply to the acreage (actually hectarage but forgive this traditionalist his little pleasures) of land held. It’s not quite in one leap though: over a period of years it moves from the historical amount based on past production to the flat per acre payment. That change is having its obvious effect: previously you had to actually farm the land, get something out of it. Now you just have to own the land to get the cheque.”
Just shows the pointy heads often know bugger all about what they opining about at length.
In 1992 the EEC (as then was) introduced the IACS system to the CAP. The Integrated Administrative Control System. This was a massive change in the CAP, which previously had directed all farm subsidies to guaranteeing prices for output, which has resulted in the butter mountains and wine lakes of some notoriety. That was all done away with, and instead farmers would be paid a rate per acre (which varied depending on the crop) in cash. And no that money did NOT require you to farm the land. Because they also introduced a thing called Set-a-Side as well, whereby you could take your land out of production and still get payments, just like if you had crops in the land. So if land was going to go up a massive amount overnight because of the sudden arrival of a cash subsidy being capitalised into the land value, it was 1991/2, not 2008. Anyone, landowner or farmer could get c.£100/acre for doing absolutely nothing. Most didn’t do that, they went on farming, but I do know of one farm local to me that did. They put the whole farm into SAS and did nothing except cash the cheque for nigh on 20 years.
Then in 2003/4 the (by this time) EU changed things again. I think as a result of the WTO declaring EU farm subsidies unfair competition or something. They needed to break the link between farming the land and getting the subsidy, so they invented the Single Farm Payment Scheme. Which paid virtually the same rate per acre as before, only this time there was explicitly no requirement to farm the land you could just cash the cheque each year, as long as you kept the land in Good Agricultural and Environmental Condition (GAEC), which basically meant topping the weeds once a year. In practical terms nothing changed. The amount of money paid to farmers did not change. They could still collect it for doing nothing, as they had been able to since 1992. The wording of the scheme changed, but the money didn’t. If anything it probably fell a bit (its hard to know as the amount was denominated in a basket of European currencies (and then the Euro) before being translated into GBP, so what a UK farmer got depended on the exchange rate).
“Now you just have to own the land to get the cheque.”
And actually the above quote is 100% wrong. One of the things that the 2004 reforms introduced was the concept of ‘Entitlements’. This meant that you owned a right to claim the subsidy on every acre you farmed, and that right was given to the person who had been farming the land in a 3 year reference period. So if you owned land but had been renting it out in that 3 year period, you didn’t get any entitlements, your tenant got them. And if he stopped farming your land, and left, then the entitlements went with him, and you as landowner could claim nothing. So rather than the previous 1992-2004 system where the subsidy was attached to the land, and if a land owner ended a tenancy he could claim those subsidies himself as of right, under the new 2004 system he couldn’t. If anything land values should have fallen post 2004, because you need entitlements to claim subsidy, and the only way to get them if they weren’t given to you by the EU was to buy them on the open market (they were a tradeable right).
So if farm land went up 30% in 2008 it had absolutely NOTHING to do with farm subsidies. They were the same as they had been for over a decade, nothing had changed at all. There was a lot of administrative faffing around at that time for sure, but the cash you got was the same. I know all of this, because I have lived it, for the last 30 years. When I left school I was the one tasked with dealing with the new IACS system, and I managed to convince Ma and Pa to stump up for a shiny new 486 PC to run everything through.