We often hear that there is an aging problem in agriculture. The 2012 Census of Agriculture puts the average age of all Maryland agricultural operators at 56.4 years old and nationally the average age is 54.9 years old. We often see this average age used to illustrate that there is an aging problem in U.S. agriculture. But is there one?
The 2012 Census of Agriculture categories break operators up into Principal Operator, Second Operator, and Third Operator. USDA defines principal operator asthe one primarily responsible for day-to-day operation of the ag operation. USDA allows for the inclusion of two additional operators in the Census. For example, John, his son Steve, and Steve’s daughter Stacy all farm together. Under the Census, John is potentially the Principal Operator, Steve would be the Second Operator, and Stacy would be the Third Operator. John may only be a figurehead in the operation at this point, but his age and status as Principal Operator is still counted as such in the Census. Now imagine a few thousand operations exactly like this one not only in Maryland but around the country. This could have some impact on computing the average age of producers.
What happens when we pull Principal Operators out of the data? For Second Operators in Maryland, the average age is 53.1 (table 1); nationally it is 53.4 (table 2). When we move to the Third Operator category, that average age drops to 43.9 in Maryland and 46 nationally. In Maryland, the percentage of producers under 25 to 34 years old goes from 4.9 percent of all Principal Operators to 11.17 percent of Second Operators, and 32.35 percent of Third Operators (table 3). We also see producers between the age of 35 to 54 higher for Second and Third Operators compared with Principal Operators in Maryland (table 3). Similar results exist when comparing the numbers nationally (table 4).
So why am I discussing this today? The data highlights a potential need for farm transition planning. The Census data demonstrates we do have a younger generation involved in agriculture. The older groups (Principal Operators and Second Operators) need to make sure the Third Operators are gaining the skills necessary to take over management of the farm. This will allow the farm to continue successfully through the transition process.
Let’s go back to my earlier example with John, Steve, and Stacy. John (Principal Operator) will need to develop a transition plan for the farming operation. This will mean sitting down, developing goals, and communicating with Steve (Second Operator) and Stacy (Third Operator). This may mean passing on some control of the operation to Steve during John’s lifetime, but it may also mean bypassing Steve and turning control over to Stacy. Steve may not want the stress of managing the farm and may be looking at retirement. But deciding what to do can only happen after the family communicates.
How the farm transfers from one generation to the next does not follow a simple formula. It is going to depend on your goals and the goals of those who will inherit the farm. For those that do not know, a new University of Maryland Extension program page was launched dedicated to “Farm Transition and Estate Planning.” (https://extension.umd.edu/agtransitions). One tool available is a recorded webinar with Shannon Ferrell, Associate Professor at Oklahoma State University, who discusses the farm transition process. The webinar runs approximately an hour.
This year, AREC’s Crop Insurance Education Program and the Agriculture Law Education Initiative will host some Farm Estate Planning and Farm Transition workshops around the state which will provide a starting point for many of you. Check the calendar on the Farm Transition and Estate Planning page for dates and locations.