Rising Costs and Land Values Challenge Aspiring Farmers' Dreams of Ownership

New farmers across the country are facing challenges when it comes to fulfilling their dreams of owning agricultural land. The rising costs and values associated with farming are making it increasingly elusive for many individuals.

One of the contributing factors is the surge in cropland value, which has made it harder for farmers to afford their own land. In South Dakota, the average value of an acre of cropland jumped 19% from 2021 to 2022. Today, the average cost of an acre of cropland in the state stands at $5,458, which is $4,715 more than in 2003.

Various factors have driven this increase in land values. These include increased global demand for grain, limited availability of land for sale, federal pandemic stimulus payments that bolstered demand for land, and higher corn prices, making cropland more profitable.

It's not just land values that pose challenges to aspiring farmers. Rising input costs such as fertilizer, fuel, farm machinery, building materials, seed, and feed have also burdened farmers. These cost increases, coupled with doubled interest rates on loans, have made farming a highly capital-intensive endeavor. The high costs of production serve as significant barriers for both renting and purchasing farmland, limiting opportunities for new entrants to the farming industry.

Tenant farmers who rely on renting land are also facing difficulties. The higher land prices have driven up rental rates, making it increasingly unaffordable for some farmers to rent land as well.

Programs like the Farm Beginnings program exist to support new farmers in developing sustainable business models, the focus is often on diverse, smaller-scale farms that produce items like bees, chickens, fruits, and vegetables. Large-scale grain and cattle farms, which are popular in many states, receive less attention and support.

The challenges faced by farmers highlight the complex dynamics of the agricultural industry, from increasing land values to rising input costs. These factors pose significant barriers to entry and hinder the ability of new farmers to establish themselves in the industry.