UPDATE 3-Japan Sept consumer prices fall, weak spending clouds outlook
* BOJ likely to cut price f'casts, stand pat on policy (Adds BOJ's price index)
* U.S. goal is to create 100,000 new farmers
* $1.8 billion in U.S. loans to beginning farmers in 2011
* Iowa, Nebraska, Minnesota top states for new farmer loans
* Specialty crops, organic food a focus
By Carey Gillam
HALLSVILLE, Mo., Feb 6 Dan Pugh wishes he had a bigger tractor and his wife Laura worries about their chickens in the winter weather. But as new farmers putting down roots in rural Missouri, the Pughs are counting on more rewards than regrets in trading their city lives for the country.
A better quality of food and life are among the factors that caused Dan, 47, to leave a career in sales last year and move Laura, 48, and their two young children to 50-acres (20 hectares) of rolling pastureland they call Honey Creek Farm.
The Pughs will plant their first crop of organic spinach and lettuces in the next few weeks on ground they tilled behind the barn they converted into a two-bedroom home. They are shopping for sheep and hogs. And though their first hives of bees mysteriously died, Laura is determined to develop a successful honey operation as well.
"The whole food and farming system is so out of whack," Dan Pugh said. "We want better and we can do something to help other people eat better."
For those who remember the American TV series, call it the "Green Acres" effect. Fueled by an economic downturn that has curtailed the upward mobility of many corporate jobs, general dissatisfaction with suburban stresses and growing discontent with what they see as the ills of industrialized agriculture, thousands of families across the United States have left suburban cul de sacs and headed to the countryside - forging a new demographic of family farmer.
The U.S. government is not only monitoring the trend, it is encouraging it - backing loans for land purchases and operating expenses as well as grants for seminars and workshops to train people how to be farmers. Government-backed loans to new farmers have more than doubled in the past decade.
The goal is to reverse a worrisome trend: U.S. Census data through 2007 showed a lack of young farmers to replace aging operators - the average age of U.S. farmers rose from 52 in 1987 to 55 in 2007. The government hopes that new census data due this year will show more young farmers, a factor that government leaders say is critical for the future of food production.
Agriculture Secretary Tom Vilsack has set a goal of creating 100,000 new farmers in the next few years. Department of Agriculture programs target youth, women, Hispanics, American Indians and returning military veterans. It does not matter if the want-to-be farmers have agriculture in their background or have never set foot outside the city, there are programs to help them buy land and equipment and figure out what to grow.
"The farming population today is aging rather rapidly," Vilsack said in an interview. "Over 30 percent of the current farm population is over the age of 65. We have a whole generation that is set to retire. The question is then who will take over those operations. We need generations of leaders in American agriculture to continue our position as the number one agricultural country in the world."
U.S. agriculture leaders say change is under way in Washington to support new farm practices and they say a rural renaissance is not only a way to add diversity to food production but also a means for bolstering the economy and reversing a decline in rural populations.
Beginning farmers are defined as anyone who has run a farm or ranch for less than 10 years. There are currently more than 450,000 beginning farms, about 21 percent of the nation's 2.1 million family farms, according to the USDA. But the government wants more.
To encourage more would-be farmers, USDA's Farm Service Agency (FSA) last year launched a "Start2Farm" website and is heavily marketing a range of financial and educational assistance programs.
On Jan. 20, FSA announce a new rule to expand loan opportunities. It also said it was expanding to all 50 states a program that guarantees farmland purchase contracts for beginning farmers and ranchers.
"This is to try to make sure rural America has a chance to thrive economically," said Chris Beyerhelm, FSA's deputy administrator for farm loan programs. "This is a focus of this administration."
Loan programs for beginning farmers and ranchers were introduced in 1992 but had little impact. So the 2008 Farm Bill greatly expanded assistance to include loans, commodity payments, conservation payments, and training programs. Since 2008, the number of loans to beginning farmers and ranchers has climbed from just over 9,000 to more than 15,000.
Last year, the FSA issued obligations totaling $1.77 billion to new farmers and ranchers, up from $1.59 billion in 2009, $1.2 billion in 2008 and $839.5 million in 2002.
Farmers in Iowa, the largest U.S. corn-producing state, received the most - last year new Iowa farmers got $118.6 million in beginning farmer program loans. New farmers in Nebraska, Minnesota, Wisconsin, Georgia, and Arkansas are other top recipients.
But every U.S. state is represented in the disbursements that can go to children of farmers who want to return to a family farm, as well as people who have no farming background or connections.
Howard Buffett, the son of billionaire investor Warren Buffett, runs a foundation focused on global food concerns and said his 29-year-old son recently traded in a career with the U.S. Defense Department to become a Nebraska farmer.
"We have a real challenge in this country in getting the next generation into agriculture," Buffett said. "Getting kids to come back to the farm is really difficult but really important."
Universities around the country offer grant-funded educational courses on fundamentals that include finding farmland to buy, food safety, financing and agricultural practices, as well as specific training on topics like "grazing goats," "Chickens 101" and "Basic Beekeeping."
"It is not just a movement that is taking place in the middle of the country. It is all over," said Debi Kelly, an extension associate with the University of Missouri who helps manage beginning farmer programs.
Pending bills in Congress would set up a micro-loan program for new farmers for everything from vegetable farms to small dairy farms. And backers of beginning farmers are also lobbying to add to the 2012 farm bill language that would ease hurdles for them to get crop insurance.
"Farming has become an incredibly sexy topic and occupation for young people," said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition. "I've never seen anything like it in my experience."
One factor spurring these next-generation farmers is a growing subculture that is highly critical of what conventional agriculture has become. The documentary "Food Inc.," which depicts the nation's food supply as controlled by a handful of corporations that often put profit ahead of consumer health, was a call to action for some.
They worry that unlabeled genetically modified foods are harmful and fear that overuse of farming chemicals is damaging the soil and the food grown in it. They are angry about the way poultry, hogs and cattle are confined and dosed with antibiotics before slaughter.
It is too early to know if the new breed of farmer will have a significant influence on reversing the trend toward fewer and larger farms, or on the reliance on genetically modified seeds and chemical applications for crops, or on the shopping and eating habits of consumers.
But as the movement builds, conflicts already are festering as the younger, urbanized approach challenges the tenets of modern U.S. agriculture.
Just last month, a consortium of U.S. organic and small family farmers took on global seed giant Monsanto Co (MON.N) in a court hearing in New York. The growers want protection against the seed giant if their organic seed becomes contaminated with its patented biotech seed germplasm. A judge's ruling is due in March on Monsanto's motion for dismissal.
There also are face-offs over costly farmland, chemical applications and marketing strategies. Tension also is tied to farm programs geared toward commodity subsidies that favor large-scale production over small operations.
"I think there is much more conflict between these beginning farmers and the agribusiness establishment and their captive federal and state agencies, who see this trend as a threat to business as usual in rural America," said John Peck, executive director of the Family Farm Defenders group.
The influence of mainstream agriculture on their farming operations is something that troubles the Pughs, who will be planting their first spinach seed soon. They fear that chemicals used at a neighboring corn farm could hamper their efforts to be certified as organic producers. And they struggled so much to find affordable organic grain to feed their chickens that they gave up.
"Farming and food is so basic. We all have to eat to live," said Laura Pugh. "It is scary to see what is going on."
Another troubling factor for new farmers is the skyrocketing cost of farmland. Year-over-year appreciation rates top 10, 20 and 30 percent in some states. In Nebraska, prices rose by almost 40 percent in 2011 over 2010, according to the Federal Reserve.
Land values are rising as farmers are benefiting from historically high prices for corn, wheat, soybeans and cattle, amid strong export demand and a boom in biofuel demand.
But new farmers in many cases are struggling to find quality land they can afford and if do buy, there is fear that a reversal in crop prices could leave them over-leveraged.
"I've been telling people, be cautious. You should work through the math," said David Baker, Iowa State University's farm transition specialist for the Iowa Beginning Farmer Program. "If corn were to drop by half, if soy dropped by half, does it still work? Can you handle it without a lot of heartburn?"
The Pughs feel fortunate to have bought their land at $2,300 per acre from the family of a farmer who had died. Although the tract had once been part of a large multi-generational family farm, the heirs had dispersed around the country.
The Pughs say they still have much to learn. They take classes and consult with advisors but hope soon to have a thriving, multi-faceted business that serves local farmers' markets in nearby Columbia, Missouri. They recognize they may never match the salary Dan drew for selling medical equipment but relish the chance to make a difference in the food they feed their family and sell to others.
"My dad thinks we're crazy," Laura Pugh said. "But I'm excited."
* BOJ likely to cut price f'casts, stand pat on policy (Adds BOJ's price index)
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