by Steve, a beginning cotton farmer in Georgia
I find the more I look the average age of the American farmer is rising sharply. Why is that important? Just like any other creature, if its habitat is destroyed it soon dies off. The habitat for young and small farmers is disappearing very fast. Land prices have gone through the roof and USDA payments are going to larger and larger farms.
The estimate from the Environmental Working Group is 10% of farms receive 80% of government payments. People argue that isn’t right but I can tell you in my area it’s pretty accurate. Partnerships are allowed to draw as much money as they can get partners for. Four 10,000-acre partnership farms that seem to have an endless supply of relatives and foremen who want to be their partners surround me.
Because of the competition for land from the large farms almost all of the USDA program payments in my area are bid into cash rent and land prices, making the government subsides basically useless or harmful to me. I consider myself pretty optimistic but with the current farm bill I don’t see much of a future in agriculture for small or young farmers unless you are willing to lend your name and social security number to a partnership farm.
I wish my situation could be blamed on poor farming or management at least then some young farmers would make it. I am however a good manager and farmer. Three weeks ago I was at the first ever Georgia Quality Cotton Awards and my cotton had the highest loan value in the state and a yield well over two bales. If I can’t make it who can?
I don’t feel overly optimistic about my future as a farmer even though I have been able to build some equity in my equipment over the last few years. Land prices and large partnership farms drawing unlimited government payments are the two largest obstacles for me. The Georgia Farm Bureau Young Farmer Committee this year listed land availability as the biggest challenge facing their operations so at least I know I’m not alone.
I am currently in Washington DC participating in a National Farmers Union fly-in to lobby Congress on farm and rural policy. By the end of my trip to Washington I will have spent over a thousand dollars of my own money and four days of my time. I’m sure I will learn a lot and meet a lot of great people while here but my main hope is to inform the people representing the farmers of our country the effects of the large loopholes in the current farm bills payment limits and the inability of young and small farmers to acquire land, our habitat.
Two things congress can do to help the future of young and small farmers.
First put a payment cap of no more than 360,000 without allowing the three-entity rule in any extension of the farm bill. If the current farm bill is not extended, the payment limit loopholes need to be closed in the new farm bill and USDA needs to enforce the payment limits, not help mega-farms find a way around them. The Three entity rule is one of the main tools farmers use to become larger than average and circumvent payment limits.
Second through tax incentives and targeted lending make it attractive to sell land to young and small farmers. It should be possible to give tax credits to people who sell to small or young farmers. It should also be possible to tax people at a high rate who take farm and timber land out of production for development. Also the IRS 1031 tax exchange should be taken away from people who use farm and timber land as tax shelters and are hunting a place to reinvest their money to avoid paying taxes after making millions on real estate development deals.
Each year the land of my community is being purchased by people from Atlanta and Florida who can buy three to ten times as much land as they just sold. The problem with this is that land costs for farmers are rising rapidly because these 1031 tax exchanges and purchases by large, aggressively expanding mega-farms are setting the land market. Cash rents rise accordingly and farmers’ rent checks are leaving town and not coming back, leaving less local money to circulate in the community.
The vicious cycle caused by unlimited federal farm commodity programs:
1. unlimited government payments finance expansion, big farms get bigger;
2. well financed operations use capital to gain higher and higher yields;
3. over production results, and prices drop;
4. competition for land causes land costs to rise (mega-farms bid up cash rents);
5. neighbors have to outbid each other for land, while prices drop – this causes friction;
6. higher yields and low prices = higher government payments;
7. high cash rents and artificially inflated land values invites speculation, foreign & domestic;
8. less and less local ownership of land; as prices get higher locals know the profitability of the land cannot sustain the selling price;
9. less circulation of local money, more rent money going out of town, less of a chance for local communities to survive, beginning and small farmers struggle to survive;
10. further consolidation occurs, and the cycle repeats
The end result is that our current farm legislation is devastating rural America. About 80% of payments are going to the top 10% of recipients. It is causing a rapid consolidation of our farms and land. This in turn leaves rural America with fewer small businesses. It replaces them with no jobs or minimum wage jobs working for mega farms. This creates less and less of a sense of community and fewer and fewer of rural America’s children returning to the farm. As a result of this failed farm policy, the average age is rising and small towns are dying all across rural America.
post a question or comment here, or contact John Crabtree, firstname.lastname@example.org
Center for Rural Affairs
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