USDA study: Ag debt, assets rise at similar rate

The United States Department of Agriculture recently updated its state outlook figures and the numbers continue to show how Colorado has been impacted by national agriculture trends.

Continued consolidation of farm operations into larger, more cost-efficient behemoths, the rising age of the average farmer as younger generations decide not to farm, and the continued costs of farming are profiled in the latest figures.

The number of farms in Colorado has risen steadily since 1990, while the amount of farmland in the state has declined. There is no question the number of small or hobby farms has exploded recently – accounting for the increase in the number of farms. Farmland is decreasing along the Front Range and other cites because of urban growth.

The average age of farmers in Colorado is inching toward 55. This is a trend fueled by younger generations’ desire to live in larger cities and get jobs with higher wages. The USDA study paints this portrait by showing the discrepancy in per capita earnings of rural workers versus urban workers. In 2003, an urban employee earned $35,832 per year while a rural employee could expect to take home close to $10,000 less.

This disparity of income means farmers have to borrow more to make ends meet.

Agricultural debt has risen by 52 percent since 1990, but the figure isn’t worrisome because farm assets have risen at a similar rate. The latest USDA figures show Colorado’s farm debt in 2003 was approximately $4.1 billion compared with $2.72 billion in 1990.

Stephen Davies, chair of the Colorado State University department of Agricultural Economics, has researched the impact of “hobby farms” and said his research may show why assets have increased at the same clip as debt.

“Smaller farms have more assets per output,” Davies said. “It makes sense because you have got to have a barn and you have got to have a tractor. So, even if you only have 40 acres, there is a certain minimum of fixed assets that you need.”

The increase of farm debt is concerning because it is outpacing the index of prices paid by farmers. The benchmark for the index was set at 100 during the years of 1990-1992. In 1994, the index reported a figure of 106 in January. In 2005, that same index increased 28 percent to 137 during January. By comparison, the prices farmers received for their goods remained strikingly lower than what they pay to operate. In 1994, the index was at 104 and in 2005 it had risen less than 6 percent to 111.

The picture for the future of farming in Colorado is not as bleak as it may seem at first glance. The amount of farm real estate counted as an asset versus a debt is $21.4 billion versus $2.1 billion.

 “It is always true that real estate is a very large proportion of farm assets,” Davies said. “That might even be higher here than in lots of other places.”

Colorado circles chuck wagons

The Colorado State Department of Agriculture is circling the wagons to encourage consumers to continue buying Colorado beef after a second positive case of Bovine Spongiform Encephalopathy, or mad cow disease, was found in the United States.

“Along with the Colorado cattle and beef industry, we remain confident in the effectiveness of the food safety systems due to the firewalls the federal government has integrated during the past 15 years,´ said Don Ament, the state’s commissioner of agriculture.

On June 24, officials were notified that three inconclusive BSE tests in 2004 were retested using another common test called rapid Western Blot. While two of these initial inconclusive tests were confirmed negative, one of the retested samples was a reactor, or positive, when the rapid Western Blot test was performed. This finding has been confirmed by experts at the World Reference Laboratory in Weybridge, England.

By testing as many animals as possible with clinical signs of the disease that are considered to be at high risk for BSE, the U.S. Department of Agriculture’s surveillance program is designed to provide information about the disease’s prevalence in the United States.

“Since the program began, additional positive tests were fully anticipated,´ said Ament. “It is important to remember about 400,000 animals have been tested for the disease, and only this one animal has tested positive for the disease.”

Kim Lock is the agriculture reporter for the Northern Colorado Business Report. To suggest column ideas contact her at (970) 221-5400 ext. 222 or at klock@ncbr.com.

on Facebook on LinkedIn