The Impacts of Economic, Demographic, and Weather Factors on the Exit of Beginning Farmers in the United States

Abstract

The success of efforts to promote sustainability and growth of Beginning Farmers and Ranchers (BFRs) depends on a set of diverse factors whose individual impacts on the BFR survival in or exit from farming need further clarification. This paper evaluates how a variety of economic and demographic factors, together with weather variability, affect BFRs' exit from farming using farm-level data from the US Census of Agriculture for the period 1992-2012. The analysis uses insights from the literature on firm exit, recent research on young and beginning farmers, and the literature on climate impacts on agriculture since weather remains a key input to farming and its variability is a major source of risk to less experienced BFRs. The main finding is that flow variables such as profitability and off-farm employment do not affect BFR exit, while reliance on government payments increases the exit probability. Consistent with previous work, the size of operations matters, as BFRs with larger asset ownership, higher sales, and those in livestock production have lower probability of exit. Price variability that affects exit is largely attributable to weather variability, a finding which is consistent with that of previous work. The weather impacts on BFR exit are mostly attributable to droughts, but temperature also has a non-linear and highly seasonal impact.

Multifunctional farming as successful pathway for the next generation of Thai farmers

“…Although explaining people’s career decisions needed to incorporate as many relevant factors as possible, among these factors, income is one of the most important factors to explaining career decisions. Gross farming income (sales volume) was included as an explanatory variable in the analysis of Nadolnyak et al [ 23 ], which showed gross income had a negative impact on young farmers’ decisions to exit farming. Farming income also varies with off-farm income, farm type (i.e., small-scale and subsistence farming, lifestyle farming), farm size and farming revenues, farm activity (e.g., livestock, cash crops, staple food), farm location, farm diversification, farmers’ age, farming experience, and government payments [ 24 ].…”

“…Individual factors–age, formal education, skills and abilities, gender, and race [ 12 , 22 , 23 , 26 , 28 , 30 ],…”

“…Our study is novel in two ways. Firstly, it focuses on both physical and psychological factors [e.g., 3 , 20 , 21 ], while most studies focus on one or the other [ 1 , 2 , 4 , 12 , 22 , 23 ]. Secondly, it is one of the few studies conducted in a developing country [ 3 , 6 , 21 , 22 ].…”

“…Secondly, it is one of the few studies conducted in a developing country [ 3 , 6 , 21 , 22 ]. While the problem of an ageing farming society is global, most studies on this subject so far were conducted in developed countries in Europe, the USA or Australia [ 1 , 4 , 12 , 23 ]. The results of our study are therefore of relevance to policy-making in other Asian and developing countries that sooner or later may face a decline in interest of young people to farm, an exodus of youth from rural areas and ageing farmers left behind on the land.…”

Credit Constraints and Beginning Farmers’ Production in the U.S.: Evidence from Propensity Score Matching with Principal Component Clustering

“…Access to credit is also important in the context of the pending transition of farm assets from retiring operators to the new generations of farmers, as well as in the context of the agricultural downturn and the economic consequences of the COVID-19 pandemic [15][16][17][18]. For example, BFRs are at a greater risk of financial stress and the agricultural downturn has negatively affected their profitability, liquidity, and solvency, although it had no effect on their repayment capacity [19].…”