The Great Land Transfer

 

 

Nearly 70% of America’s farmers are over the age of 65. And I’m not talking about corporate farms or massive agribusinesses. I’m talking about the thousands of families that own the majority of the family farmland in the country, the ones who struggle to stay on the margins of the agriculture industry and make a living on their land. These farmers aren’t going to be here in 30 years, which means that within the next 30 years all of their land is going to change hands.

At the end of the day, there are only four options for these lands:

  • Get passed down to a family member who will continue to farm the land
  • Get passed down to a family member who will sell it to development or develop it themselves
  • Get sold to a developer
  • Get sold to another farmer

The first option is, of course, the preferable one. However, fewer and fewer members of the younger generation are staying on the farm. The majority of them are leaving to pursue other activities. The second option is therefore unfortunately common; the land gets deeded to a child or child-in-law, who promptly turns around and sells the land to a developer for a large sum. The third option is less common, as the farmer is usually unwilling to sell his or her land to a developer after investing so much time and effort into it over the years, but it is still an option that occasionally happens. The final option is, in my opinion the best of the four choices. It is also the most underutilized choice because the network of young people looking to get into farming is a largely untapped resource. This influx of young people interested in farming is a result of the recent focus on organic agriculture and free-range food products. We need a way to coordinate a pathway between the two populations – the retiring farmers and the young people looking to start farming – so that farmland can be passed on to a new generation that will value it and use it. An example of an organization that is doing this is the Legal Food Hub (https://www.legalfoodhub.org), run by the Conservation Law Foundation. This is a small venture of CLF’s that is making a difference in the farming landscape of the next 30 years. It connects older farmers with younger farmers and matches them with an attorney that can facilitate the transfer of land between the two – all for minimal or even no cost.

Thankfully, the legislative and governmental realms are finally catching onto the need for more investment in the upcoming land transfer process. Speaking at a hearing on Capitol Hill, several senators and agricultural interest groups emphasized the need for more financial assistance and greater opportunities for land acquisition by young and incoming farmers. They put together a policy titled “Beginner Farmer and Rancher Development Program,” which modifies the tax code to incentivize existing farmers to transfer their land to younger, incoming farmers. Structural changes to the Farm Service Agency’s loan program were also made in order to make it easier for young farmers to get loans for purchasing and starting a farm. Through another initiative, the Transition Incentives Program (TIP) was recently started in order to provide rental payments to farmers who have Conservation Reserve Program (CRP) land that they are willing to rent to a new farmer (http://sustainableagriculture.net/publications/grassrootsguide/farming-opportunities/crp-transition-option/). The program offers 2 extra years of CRP payments to farmers who own CRP land if they rent or sell the land to a new farmer. There are only two major requirements for TIP: 1) that the existing farmer be retiring or close to retiring and have some CRP land (basically just land that is resting), and 2) that the new farmer develop a long-term conservation plan for the land (http://aglaw.osu.edu/blog-categories/conservation-programs). The government might not be able to do everything, but it has certainly made a massive step in the right direction with the development of the TIP.

Legislators would do well to keep in mind the barriers and struggles that new and incoming farmers face when trying to begin farming. Sustainable Agriculture magazine (http://www.agriculture.com/news/top-7-concerns-of-young-farmers?esrc=agex081916&did=57047) listed the following as the primary concerns for individuals hoping to start farming (I have bolded the three that are clearly the most pressing and serious impediments):

In the meantime, an excellent option for farmers who are looking to ensure that their farm does not get turned into a housing block is the conservation easement. A conservation easement is basically a legal agreement between a landowner and a land trust or government agency that permanently limits the use of the land. The purpose of a conservation easement is to protect and safeguard the land. The process of drawing up a conservation easement also allows farmers to designate their heirs, formulate an estate plan, and determine how they want the land to be used in the meantime. Conservation easements also come with significant tax benefits, which, as of 2015, have recently increased nearly twofold. On top of that, farmers and ranchers in particular are allowed to deduct up to 100% of their income if they utilize conversation easements. And to top it all off, conservation easements, by limiting the potential uses of the land in question, devalue the land; this means that it will be less expensive for a new farmer to purchase the land. As I see it, the use of a conservation easement for any farmer is a “no-brainer.”

 

 

 

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