In Minnesota, the beginning farmer program provides a cost-share opportunity for farmers with less than 10 years of experience to gain additional insight and expertise as it pertains to their finances. This program provides the same level of cost-share support regardless of the commodities grown or how a farm is purchased or transferred from one generation to the next.
This research studies the differences in the financial performance of beginning and established farms utilizing Minnesota FINBIN (www.finbin.umn.edu) data from 1996-2020. Farmers were divided into four groups: (1) beginning farmers are first-generation farmers with 10 years of experience or less, (2) established farmers have over 10 years of experience, (3) second-generation beginning farmers have taken over an existing farm and still have less than 10 years of farming experience, and (4) farmers that were both beginning farmers and established farmers in our time series are termed, transitioned to established.
A variety of financial ratios, including the debt-to-asset ratio, current ratio, and operating profit margin were compared for each group to determine differences in their financial position. Preliminary results show that financial positions differ across all groups with first- and second-generation beginning farmers having varying levels of success. These results suggest that policies for first-generation and second-generation beginning farmers may need modifications to enhance the economic viability of first-generation beginning farmer operations.