Menu

by Jerry Barr

Young farmers and ranchers today literally have a world of opportunity before them. Like never before, producers are tapped into the global market through agricultural exports. They are on the cutting edge of improving the environment, medicine and nutrition through the use of biotechnology. Importantly, farmers have a seat at the table during congressional deliberations, as well as world trade negotiations. It’s certainly no longer our grandparent’s type of agriculture.

But, included in agriculture’s many rewards are also challenges.

With farm real estate valued on average at $1,270 per acre, and the average farm size at 441 acres, that’s a lot of money in land and building costs just to compete, not to mention be profitable in today’s farm landscape. While these costs can be quite overwhelming for a young producer wanting to expand the family farm, the enormity of these costs may crush the dream of a young person wishing to enter the farming business.

Legislation in Congress would help younger farmers and would-be producers meet these obstacles head on. The Beginning Farmers and Ranchers Act of 2005, or H.R. 2034, eliminates capital gains taxes when agricultural land is sold to a beginning farmer or rancher. The bill would help beginning farmers acquire land they need to get started and expand farmers the ground they need to keep their businesses growing and prosperous.

Today’s average farmer is 53 years old. As farms and ranches are sold in anticipation of retirement, selling prices reflect the cost of capital gains taxes. This makes farmland more expensive for beginning or expanding producers and can even push land out of agriculture when non-agriculture buyers are able to pay more.

The capital gains taxes that producers pay are high because farming is land-intensive with assets typically held for long periods of time. And high capital gains taxes make it more difficult to transfer farmland between agricultural producers.

It is crucial to find an avenue to attract younger people to agriculture, especially those who don’t already have a way in. The Beginning Farmers and Ranchers Act is a step in the right direction.