Some things never change

Through the rapid changes and uncertainties in farming, Minnesota families persevere.

by Rebecca Harrington

When Mark Koepp started farming in the 1980s, he joined 16,000 other pig farmers in Minnesota. Today, about a quarter are left.

Fewer people are staying on the family farm, and the farms are getting bigger. Technology and improved methods have made crop yields skyrocket.

But some things never change.

Farmers can always count on the weather to be unpredictable, and recently they’ve been able to count on volatile crop prices and uncertain legislation funding their work.

Without a current Farm Bill and with the worst drought in 25 years, Minnesota farmers managed to fare better financially last year than they have since the 1970s. A study released last week from the University of Minnesota Extension and Minnesota State Colleges and Universities showed overall, the average net farm income increased 47 percent last year.

Koepp always knew he wanted to be a farmer, and he’s built on the success of previous generations. His son, Bruce, will eventually take over the now-3,000-acre family farm in Belle Plaine, Minn., as the sixth generation of Koepps.

“I’ll never sell,” Mark Koepp said. “It’ll just go down the line.”

Farm Bill hiatus

Congress is supposed to pass a Farm Bill every five years, and it’s “embarrassing” that it hasn’t been updated yet, said Lakefield, Minn., farmer Dan O’Connor.

Colloquially known as the Farm Bill, the Agricultural Reform, Food and Jobs Act is comprehensive legislation that also funds environmental and food stamp programs.

The U.S. Senate passed its version of the Farm Bill in September, but it didn’t pass through the House by the 2008 bill’s expiration date.

When Congress passed legislation avoiding the sweeping budget cuts known as the fiscal cliff in January, it included an extension of the 2008 Farm Bill through September of this year.

Some members of Congress want to discontinue direct payments to farmers based on the number of acres they farm. The U.S. Department of Agriculture estimates direct payments make up 6 percent of farmers’ net income nationwide.

Greg Schwarz — corn, soybean and turkey farmer in Le Sueur, Minn., and Minnesota Corn Growers Association board member — said many farmers have their plans laid out for the next few years, so their decisions aren’t affected much by varying Farm Bill. But bankers need to know how the government will subsidize farming to decide how to finance farmers.

Schwarz is more optimistic about this session and said he thinks Congress might act as early as the end of the month.

“There’s some optimism,” he said. “There’s understanding that this is something that farmers need to get done.”

Staying optimistic

Mark Koepp said he’ll plant his corn and soybeans as soon as weather permits, and he can’t afford to waste a single day.

“If we make another five bushels an acre by getting our crop planted on time,” he said, “on 3,000 acres is 15,000 bushels. … I won’t sleep for two days, and I’ll make $100,000.”

While most of the country was hit hard by last year’s drought, Minnesota farms did better financially than they have in years, according to research from Extension economist Dale Nordquist.

The lack of a current Farm Bill has only a “minor” effect on crop prices, land sales and farm income, Nordquist said.

Crop prices last year for corn and soybeans — Minnesota’s two most commonly grown crops — nearly doubled from 2010. But production costs were also high last year, as the prices of land, fertilizer and technology continue to rise.

Nordquist said he was surprised to see livestock farmers did well last year because high crop prices generally mean high feed costs. But many Minnesota livestock farmers grow their own feed and are more isolated from volatile crop prices.

Minnesota farms were luckier than most other drought-ridden states, Nordquist said.

“You don’t want to benefit from other farms’ disasters,” he said, “but that’s what really did happen.”

Inheriting the family way of life

Dan O’Connor’s farm has been in his family for at least four generations.

When his parents were ready to pass it on to him and his brother, John, the family went to a University of Minnesota Extension workshop for advice.

The Farm Transfer and Estate Planning workshop has helped families navigate the legal paperwork, tax laws and realities of passing the farm on to the next generation for nine years.

Gary Hachfeld, an Extension educator who helped start the program, said it has helped families transfer more than $355 million in assets.

If farm owners pass away without having a plan in place, Minnesota law requires farm assets and holdings to be equally distributed among the heirs. This could result in tax consequences, loss of the farm or a “family feud,” Hachfeld said.

“The ultimate result of that is the family doesn’t come together at Thanksgiving and Christmas and Easter,” he said, “and no one talks to one another.”

To avoid this, Hachfeld said it’s important for families to identify their goals and decide what’s best for them.

When the O’Connor brothers inherited the family farm, they put another succession plan into place that determined what would happen to it in every worst-case scenario imaginable.

And then one came true.

John O’Connor was killed in a farming accident in 2010, and his brother inherited John’s half of the family farm.

Dan O’Connor said every family should have a plan in place that outlines what to do in these situations.

“The wonderful thing about a family farming operation is that it’s built on generations of hard work and commitment and to waste that by not having a plan in place is a mad thing to do,” he said.

The future of farming

When O’Connor was young, working on the farm with his family was second nature. By the time he was in junior high, he was averaging 40 hours per week — and loving it.

“I don’t wanna lose that,” he said. “I want my children to experience that burning desire to go get goin’ and get to work and work with the animals that you love.”

O’Connor said he thinks individual farms will get bigger over the next 50 years because fewer young people are staying to take over the family farm.

Mark Koepp agreed farms will either be large family operations or small organic ones.

The Koepps have always been expanding their farm. Bruce Koepp bought his own acreage that he farms under his dad’s farm business so he can learn the ropes before taking over.

They just built a hog barn last year to house their 30,000 hogs, and Mark Koepp said he plans to have several hundred cattle in the next few years because he “has to” keep expanding.

“We’re always looking for profit areas,” Mark Koepp said, “some way of making money to keep it getting bigger.”

O’Connor said it’s got to be “in your blood” to be a good farmer. Mark Koepp agreed, saying it’s easier to learn things from the family over the years by helping out on the farm.

“What you need to have ingrained in you is [that] the pure, raw struggle that you go through from time to time is normal,” O’Connor said, “and you’ll get through it.”