Des Moines Register
02-18-07
Brasher: Chunkier subsidy alone may not entice young farmers
WASHINGTON FARM REPORT
By PHILIP BRASHER
REGISTER WASHINGTON BUREAU
Washington, D.C. - The problem is well-known across rural America. The
average age of farmers continues to climb while the number of young people
replacing them shrinks.
The question is what can the government do, if anything, to change that.
Agriculture Secretary Mike Johanns, a former 4-H member, has put the issue on
the table with a series of proposals to Congress designed to help young or
minority farmers get started in the business. His ideas include easier terms on
government loans and higher fixed payments for crops that the government
subsidizes, mainly grain and cotton.
In the Midwest, that bigger payment could mean an extra $5 an acre in income
per farmer.
Critics say the administration's proposals don't do enough to address the chief
barrier to aspiring farmers - the soaring cost of renting land.
Three-fourths of young farmers polled in Iowa, Nebraska, South Dakota and
Wyoming said that land availability was the chief problem they faced, according
to a survey by Farm Credit Services of America.
Land values in parts of Iowa are hitting $6,000 an acre because of the booming
demand for corn and soybeans, farmers and others say, and that means land
rents may explode as landlords start demanding a cut of the higher commodity
prices. Some landlords are asking farmers to pay as much as $80 an acre more
this year.
"What's happened to our land values right now is devastating" for beginning
farmers, said Mike Duffy, an economist who runs Iowa State University's
Beginning Farmer Center.
The extra subsidy Johanns is proposing won't come close to compensating for
the increases in land costs, he said.
"To have a little more money to buy more expensive land is not a long-term
solution at all," he said.
Matt Schuiteman, a 32-year-old farmer near Sioux Center, Ia., says there is a
better way to help beginning producers: Change the rules for the government
payments so young farmers can receive most of the money in the spring, when
they need the cash to get their crops planted, rather than having to wait until the
fall to collect. That wouldn't cost taxpayers a dime.
Some experts say the way to deal with high land costs is by offering tax breaks to
landlords.
The chairman of the Senate Finance Committee, Max Baucus, D-Mont., and the
panel's senior Republican, Charles Grassley of Iowa, will look at ways to assist
young farmers through tax incentives, aides say.
Iowa enacted a state tax break last year that could potentially save a landowner
up to $8,000 in taxes by renting a young farmer 320 acres, said Roger McEowen,
a tax expert at Iowa State who recently discussed the issue with the Senate
committee's staff.
Nebraska has had a similar but more restrictive program since 2000, and it's
growth has been slow. In 2005, 32 landowners received credits averaging about
$1,400 each, according to state records. State officials say they haven't had the
money to market the program properly.
One problem Congress will face no matter what they do is how to define a
beginning farmer. Johanns didn't try to do it in his proposal. Under Iowa law, a
beginning farmer is defined as having less than $300,000 in net worth. Nebraska
initially set a net-worth limit of $100,000, now raised to $200,000.
At the very least, Johanns' proposals will nudge Congress to address the issue of
beginning farmers in the 2007 farm bill as well as tax legislation. How lawmakers
do that remains to be seen.
Reporter Philip Brasher can be reached at (202) 906-8138 or
pbrasher@dmreg.co