Land availability was the No. 1 concern in this year's annual survey of American Farm Bureau Federation Young Farmer and Rancher members. What's more, economies of scale are a concern because small acreages no longer offer the potential to produce a living income.

Commercial developers are raising the bar as they jockey to buy agricultural land, and they usually come out on top.

Young farmers and ranchers cannot out-bid developers, but if the landowner selling the land would get a tax break for selling to a beginning farmer, rather than a commercial-property developer, then the landowner has less to lose.

But, AFBF members point out if the American public wants continued affordable food, a new generation of farmers and ranchers must have opportunities to become more competitive by buying productive land.

For this reason, AFBF's Young Farmers & Ranchers members have lined up to support the Beginning Farmers and Ranchers Act of 2005 (H.R. 2034). It was introduced into the House by Reps. Lee Terry (R-Neb.) and Earl Pomeroy (D-N.D.). There's also a push to introduce similar legislation in the Senate.

The legislation's most important aspect would eliminate capital-gains taxes for farmers and ranchers who sell their agricultural land to a beginning producer. If the land is sold to an established farmer, the seller would earn a 50 percent capital -gains exemption. In both cases, the land is to stay in agricultural production for 10 years from the time of purchase. The maximum capital-gains exemption allowed would be $500,000 a year.

North Dakota Farm Bureau officials point out, “Because farmers and ranchers tend to own property for long periods of time, the tax paid on the increase in land values can be significant. This threatens the transfer of farm land between agricultural producers.”

Rep. Jim Gerlach (R-Pa.) notes that agriculture is Pennsylvania’s leading industry, but the state is continually losing farms. He says farmland preservation programs are necessary, “but limitations presented by the federal tax code present a glass ceiling, hindering the effectiveness of such programs.”

Young farmers and ranchers need House and Senate support to give a new generation of producers a chance to earn a living off the land. 

Source: American Farm Bureau Federation