Passing Down The Farm Receives New Emphasis

It’s becoming increasingly difficult for older farmers to hand over their operations or keep them in the family. It’s as challenging as ever for younger would-be farm operators to gain access to the land. The graying of Oregon’s farmers and ranchers is an issue receiving a closer look this fall following a new report examining the future of the state’s farmland, who will own it, and what will be done with it. The report will be followed up later this month by a farm succession workshop and other events designed to help promote a transition to the next generation.
 
African CVO Tour“I can’t think of any other industry sector that is so focused on the graying element than agriculture,” says Jim Johnson, land use specialist with the Oregon Department of Agriculture. “No other industry has an average age of principal business owner higher than agriculture.”
 
Oregon State University, Portland State University, and the non-profit organization Rogue Farm Corps combined to produce the report, The Future of Oregon’s Agricultural Land. Among its findings– an estimated 64 percent of Oregon’s farmland, more than 10 million acres, will have new owners over the next two decades. That figure is based on an average age of Oregon farm operator that sits at 60 years old, which has steadily increased the past few decades.
 
“When you consider the management of Oregon farms is predominantly family operated, a change in ownership is a real issue in terms of what will happen to that land base,” says Johnson.
 
Whenever there is a change of farm ownership, there is likely to be some consideration of what to do with that land. Massive ownership change could potentially mean big changes in agriculture.
 
“In Oregon’s land use system, agricultural land is primarily designed for farm use, but that doesn’t preclude converting that land to non-farm uses or somebody acquiring the land and deciding not to farm it at all,” says Johnson.
 
The report warns against “the conversion of farmland to non-farm use, development, or fragmentation into parcels that are too small to support most profitable farm businesses; the sale of farmland to investors who may hold the land for future development, consolidate farmland, or make less of a positive contribution to rural communities in which they do not live or work; and rapidly rising farmland prices, which make it increasingly difficult for beginning farmers, or any person who makes their living primarily from farming, to afford land.”
 
Access to land and its affordability create a huge hurdle, especially for beginning farmers.
 
“Many farmers are leasing land as soon as it becomes available,” says Johnson. “There isn’t much land available for young and newer farmers to buy. Add the capital needed to develop the infrastructure associated with that land– farm implements, irrigation equipment, etc.– it’s a major investment up front.”
 
Among stakeholders identified in the report as being concerned about the large-scale transfer of farmland in the next two decades are family farmers hoping to create a financially secure retirement while making sure they can pass along the operation to someone who will keep the farm in agricultural production.
 
“The strength of Oregon’s agriculture is its diversity and family farms that have made strong connections with consumers,” says Klamath County farmer Tracey Liskey, a member of the State Board of Agriculture. “When we see changing ownership, it’s more likely that the farm will be purchased by bigger, corporate farms. The young farmer or rancher doesn’t have the equity to buy an operation. As the seller, you don’t have the ability to split up the land into smaller farms, and you can make more money selling to a bigger operator.”
 
Liskey is among many who see the ultimate solution is better economic health of Oregon agriculture.
 
“We need agriculture to be economically viable to make sure the next generation of farmers and ranchers can get involved. Right now, that’s a challenge. I know a lot of existing farmers are just barely hanging on. It’s hard for many to make it today with expenses four to five times higher than income. It’s a tough ballgame.”
 
Absent an economic rebound in agriculture, farmers and would-be farm operators need to take advantage of available measures. Succession planning– a legal process of passing the family farm down to the next generation– is a critically important tool that is underutilized by aging farmers and ranchers. It’s also a major recommendation in the report.
 
“Planning well in advance for succession is critical if a farmer or rancher wants to pass on a viable business, preserve their family’s legacy of land, and minimize family disputes after they pass,” says Nellie McAdams, Farm Preservation Program Director for Rogue Farm Corps. “It’s never too late to start planning, but the earlier you begin, the more prepared your family will be to minimize estate taxes and divide your estate.”
 
A free succession workshop will be held in Forest Grove October 30 with presentations from OSU’s Austin Family Business Program, an attorney, and a farmer panel. There will also be a day-long workshop next month in Tigard largely aimed at attorneys, and several other upcoming trainings.
 
Other approaches to help transition farms from older operators to the next generation include better training and more opportunities for beginning farmers to gain experience, and promoting working lands easements that help retiring farmers generate liquidity from the land, making it more affordable to beginning farmers while permanently protecting it from development.
 
It appears there is no shortage of young or beginning farmers who want to get a farm of their own.
 
“There is a much stronger interest, either by those who have never had any connection to farming whatsoever and are starting from scratch, or those who left the farm to go to school or work in another job but now realize agriculture is the occupation and lifestyle for them,” says ODA’s Johnson.
 
Either way, taking steps to make farms and ranches more affordable and accessible to a new generation is key to Oregon’s agricultural future.

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