Ensuring a place for the next generation of farmers and ranchers

Last blog I discussed concerns that America’s farmers are aging. In my opinion, aging farmers are not a great concern as long as we can ensure there are opportunities for future farmers to come along. Data shows 30% of farms will be passed from the first generation to the second and only 10% of farms will be passed on to the third generation.
Agriculture is capital intensive. Almost any form of farming requires significant land, equipment, and cash. Grain combines to harvest rice cost upwards of $400,000 and farmland throughout California often costs at least $10,000 per acre. It takes a long time to acquire that much wealth. One of the most common ways to acquire the resources needed to farm is to have it passed on to you through the family farm.
The federal estate tax threatens farmers’ and ranchers’ ability to pass on the family farm. Between land values and equipment acquired over the years, many farms and ranches exceed the current estate tax exemption of $5.25 million. Everything over the exemption level is taxed at 40% at the time of death, a huge blow to a farming operation that has finally matured and established stability.
Another threat to developing new farmers and ranchers is that the next generation might not want to pursue a career in farming. That scenario is especially likely in areas like Santa Clara County, where the history of agriculture is one of decline and the future of agriculture is uncertain. We must ensure there is potential for success in agriculture if we expect the next generation to take an interest in it.
It is important to make sure there is a place for the next generation on the farm, even if the older generation is not yet willing to retire. If the younger generation does not see an opportunity on the family farm, that next generation will not be around when it is time for the older generation to retire.
As important as it is that resources be passed on to the next generation, it is equally important that the knowledge be passed on as well. The older generation holds wisdom and experience that only comes with time. They have seen prices at all time highs and prices in the basement, they have watched consumer tastes and preferences change, they have faced international competition, and they have weathered literal and figurative storms.
There is no doubt it is tough to get into farming. We need to make sure new folks of all ages can join the ranks of America’s farmers and ranchers by inheriting the family farm or otherwise. The future of agriculture in American depends upon it.