Rural Community Building

Rural communities are harmed if small businesses and farmers cannot stay in business. If community businesses close, this decreases opportunity, off-farm jobs and quality of life, including for the youth that we want to encourage to live locally.  Rural towns need new blood and innovation to keep them vibrant.

 Farm Bureau’s concern about the aging farm population (average age is currently 57 years and 88% report that they don’t have an exit strategy) and the barriers for new farmers to enter into farming (high cost of land and national average cash rents increasing by 37% since 2000, and the estate tax burden) means that farm heirs are less likely to take over for their parents when the time comes. (Stats from the FarmLASTS project and Executive Summary.)

 Here are a few resources for strategically planning for farm and business succession:

Farm transition planning – National Ag Law Center presentation

Successful business succession resources– Farm Journal Legacy Project

Begin succession planning now article – Noble Foundation

Financial security: estate planning – Cornell University

Who will get Grandpa’s farm – eXtension Learning Lesson

 The May 31 FBNews (on pages 4-5) contains a story by Erin Anthony, FBNews Assistant Editor, about a farmer who could not join her family’s farm in Maryland due to a need to pay the estate tax, fees due by survivors when a farm or business is transitioned from one generation to the next.  Because farmers hold over two-thirds of their assets in real estate and tend to be cash poor, paying the death tax debt to the government frequently means selling off part of the farm or some needed equipment.  

North Dakota farmer shares hard-learned lessons

Raised on a Maryland dairy farm, Sarah Wilson now farms with her husband’s family in ND after estate taxes forced her grandfather to downsize. From left are Charlotte, Sarah, Molly and Jeremy. Lon Tonneson photo, Dakota Farmer Magazine.

Sarah Wilson is a fifth-generation farmer, or she would be, had she been able to stay on with the family farm in Maryland. Now in North Dakota and farming with her husband’s family, it’s Wilson’s two daughters who are the fifth generation and she’s calling for estate tax reform so they can keep it that way.

 Wilson grew up in north-central Maryland on her family’s dairy farm. The farm, originally purchased in the mid-1940s, was run by Wilson’s grandfather, Arthur Tracey, in partnership with her great-grandparents. When her great-grandparents passed away in the late 1990s, they left their half of the operation to Tracey.

 Along with the farm, Tracey was left a considerable amount of medical debt, funeral costs and, most debilitating of all, estate taxes. In the 50 years since Wilson’s family had purchased the farm, the surrounding area had substantially urbanized, driving land prices sky-high. Tracey was forced to sell one-fourth of the farm to pay the taxes and keep part of the operation going.

 “Everything on our farm stopped,” Wilson said. “Every improvement project was put on hold, and the downsizing of the farm eliminated the opportunity for some of the younger family members to join the family business.”

 Wilson pointed out that the sale of part of the farm was not exclusively her family’s loss. “The acres were sold to a developer because that’s the highest price per acre my grandfather could get,” Wilson said. “That land will never return to agricultural production. It is lost forever.”

 Tracey is still farming in Maryland, with two of Wilson’s uncles, raising dairy heifers and growing hay, corn and soybeans, while Wilson has joined her husband’s family’s operation in North Dakota where they produce corn, wheat, soybeans and pinto beans. Though unable to partner with her grandfather in the family operation, Wilson emphasized that her grandfather remains a vibrant part of her farm life in North Dakota.

 “I am so appreciative of all the time he has invested in teaching me over the years,” Wilson said. “I may not be farming at the home operation, but he has certainly inspired me to continue my career in agriculture as he has demonstrated it to be a good way to earn an honest living and raise a family.”

Wilson is sharing her story to draw lawmakers’ attention to how destructive estate taxes can be to family farms, as well as to help other growers head off some of that devastation. “Our story is a wake-up call,” she said. “If you haven’t had [estate planning] discussions, sit down and have them now.” Wilson said such conversations affect not only the future, but next-generation farmers day-to-day.

 “As young producers, we’re really paralyzed in a lot of decision making when we don’t know what to expect from the transfer of the operation and how that process is going to go,” she explained. However, sometimes farmers’ and ranchers’ strongest plans can’t bear the weight of estate taxes, which is why reform is so critical.

 “Our land is our livelihood,” Wilson said. “We need to be able to pass it on to future generations so we can continue doing the best we can to feed the world.”