Sustaining Northeast Farms for Future Generations

Sustaining Northeast Farms for Future Generations

Summary

“Sustaining Northeast Farms for Future Generations” is a three-year collaborative project that will educate 400 agriculture producers on farm succession planning issues and resource conservation policies so that future generations of farmers will operate profitably and protect our natural resources. Of the anticipated 400 farmers receiving information on farm transfer planning, 150 will take two-three of the following action steps for farm transfer:

1) Contact organizations to learn more about farm succession and natural resource protection.

2) Talk with family members about the human and natural resource needs of the farm;

3) Identify, train and mentor a farm successor;

4) Develop a better understanding of farm transfer and natural resource protection options;

5) Inventory and evaluate human and natural resources of the farm;

6) Increase awareness of natural resource and farm transfer programs;

7) Understand loan options and the farm’s financial position;

8) Understand the tax implications for land use planning, estate planning, and farmland protection;

9) Schedule meetings with attorneys, accountants, or farm transfer/resource protection staff;

10) Transfer livestock/machinery/management/
land to the next generation.

Objectives/Performance Targets

Of the 400 farmers receiving information on farm succession planning and land-use conservation policies, 150 will take at least two-three action steps to transition their farm to the next generation and/or protect their land resources within three years.

Accomplishments/Milestones

1. Farmer education needs will be identified through farm succession survey returns.

Due to a delay in funding and wrapping up of other PA Farm Link projects, this project was not intiated until the start of our fiscal year, July 1, 2004.

The first step in the project was to hold a meeting on 8/6/04 with the PA NASS, NJ NASS, the Pennsylvania Department of Agriculture, New Jersey Farm Link, and PA Farm Link to discuss the survey, the time frame and the implementation of the survey. Discussion centered on different methods of conducting the survey including doing a mail survey only and the option of doing a mail survey with a follow-up phone survey. The SARE grant specified a mail survey since the intention was to duplicate the same survey that has been conducted in Iowa and Virginia, so that Pennsylvania’s information could be added to a national pool of information on the needs of farmers in their succession planning process. This survey is also being tested in North Carolina and Wisconsin.

The thinking of the project partners is that if the same survey is administered in several states we will be able to obtain consistent data that can be used nationally to assist in policy decision-making on farm succession. Follow-up discussions decided that the survey would be mailed in January when farmers had the most time to complete a survey. One follow-up mailing would occur about 4 to 6 weeks later and the survey would be ready for analysis in April of 2005. A memorandum of understanding will be signed with the PA NASS office in the near future.

Completion of the survey analysis is expected by the fall of 2005. The timeline for completion of the survey and analysis needs to be extended beyond the original projection by about six months.

2. Listening to 8 to 10 farmers outline their educational needs through focus groups to determine the needs of farmers in transition planning and natural resource protection so that educational material and products can be developed to meet those needs a focus group was conducted on December 9, 2004. The participants included a variety of ages and experience levels.

The group consisted of:

a) two beginning farmers–one on a family farm and one starting on rented land;

b) one farmer who is midway in her farming career;

c) two farmers who will be considering transition in the next 5-7 years;

d) one farmer who is just beginning the transition process, and

e) one farmer who has completed the transition process.

All but one of the participants were full time farmers and all but one were dairy farmers. The next focus group will include primarily part-time farmers and other types of operations.

The focus group participants said that farmers have access to a lot of information on farm transfer planning but don’t take action many times until there is a crisis, such as a death in the family. It seems to be human nature. They expressed some lack of confidence in the younger generation’s ability to take over the operation, believing that some members of the older generation have a fear of the future. Sometimes people don’t know where to go or what their options are for transitioning the farm. It is difficult to talk to family about the transfer process since farms are more than businesses; there is a deeper connection. All of these reasons make it difficult to talk about or take action in the transition process. Frequently this results in lack of action and delay in transitioning to the next generation.

The farmers in the focus groups said they needed educational assistance in farm transitions. How should they handle the potential farm heir and the children who did not choose to farm? What if their children didn’t want to farm? These were big questions in their minds.

One of the biggest questions for them to answer is how to transfer to one child and still be fair to the others. It’s a question that causes concern, needs consideration, and must be handled with caring. Most of the participants agreed that you couldn’t divide the assets up equally, that you had to give the farm child a chance. Land values are too high, and the beginner can’t afford to pay market price and get started. Ways that other farmers handled these issues was viewed as important.

Another consideration is the natural resources that are needed to develop a profitable enterprise. Participants agreed that good soil fertility and resource protections were essential to being profitable now and in future generations. How to protect those resources was a concern. Several of the farmers had sold conservation easements on their farms in order to purchase more land or to assist the next generation. Stewardship of the land was viewed as an essential value and one that was held in common by all.

Profitability remains the overriding concern for succession to the next generation. One farmer asked a poignant question “How can you afford to get started in farming by working on a farm?” Since most farm workers receive lower wages on average, being able to turn those wages into assets proves difficult. High land values in Southeastern Pennsylvania only add to this dilemma. Most agreed that the farm child needs a break or they will not be able to take over the farm.

3. 300 farmers will attend educational workshops on farm start-up and farm succession. At the core of family farm ownership is the capacity of the land and the family to create a productive business operation. Without a profitable, productive business the incentive to sell to developers is overwhelming. The critical time period when most farms go out of production and into housing developments and shopping centers is when the farm family is considering retirement. If the younger generation is not interested in making farming a career, then the pressure to sell to developers increases further.

To see their business survive into the next generation, families must resolve three universal dilemmas:

How do we retain an adequate retirement income?

How do we treat the children fairly?

How do we manage the farm transfer so that the farm business is not burdened with unreasonable debt?

Farm transfer to the next generation and the desire to preserve farmland and the agriculture industry are intertwined. Without better farm transfer strategies, the industry as a whole is impacted, contributing to further decline in new farm entrants and increasing pressure to sell to developers.

Pennsylvania Farm Link has scheduled five educational “Passing on the Farm” workshops for the fall-winter of 2004-2005. They are November 15, 2004 in Washington, PA, January 6, 2005 in Clarion, PA, January 19, 2005 in Huntingdon, January 26, 2005, in Nazareth on February 10, 2005, and in Lebanon on February 17, 2005. A Beginning Farmer workshop on farm start-up has been scheduled for February 26, 2005 in Harrisburg and in western Pennsylvania in March.

To date, 748 farmers have been invited to the Passing on the farm workshops; another 731 farmers will receive invitations in January. The Passing on the Farm workshop in Washington provided educational information on farm transitions to 27 farmers. One thousand, eight hundred and thirty-eight potential or beginning farmers will be invited to attend the New and Beginning Farmer workshops. Action steps that farmers take as a result of attending these workshops will be documented and recorded.

4. 50 farmers will receive individualized assistance on farm start-up and farm succession. Typical beneficiary profiles are as follows:

1. DP is a beginning minority farmer currently living in the Philadelphia area. He has a family farm available to him in Georgia and is interested in developing a greenhouse
business raising specialty crops for restaurants. He was provided with marketing information, referred to Georgia cooperative extension for information on greenhouse information in that climate, and completed Pennsylvania Farm Link’s business planning Course. A farmer mentor familiar with greenhouse production was also located for him.

2-3. HS was matched with a dairy farm owned by LB in a leasing situation. HS expanded his herd size from 40 to 87 cows and is milking three times a day. LB is supplying the feed currently. The situation will be reevaluated next year, and LB may be willing to consider selling farm assets in the future if the arrangement continues to work well.

4. JS is a beginning farmer who currently raises beef cattle on rented land. He requested and received literature on loan options available to him and was encouraged to develop a business plan for his farm. He will consider taking the business planning course offered by PA Farm Link in the future.

5. SS wants to get started in farming. He requested and received literature on loan options available to him and will attend a business planning class offered by PA Farm Link in January, 05

Pennsylvania Farm Link also participated in a session focused on minority and immigrant farmers in Philadelphia. Ways that these groups could access farming opportunities in Pennsylvania were discussed. As a result, we received three requests from minority/immigrants to assist them in locating employment and apprenticeship opportunities on farms. Follow up will occur on these requests.

Impacts and Contributions/Outcomes

The focus group recommendations for ways that farmers can be assisted in farm transitions included:

1.Conduct “how-to” educational workshops on farm transfer. These workshops should cover the basics and focus on the need to start planning as soon as possible and identify resources that can help farmers.

2. Write about farm transfers in farm publications, including case histories to illustrate farm transfer issues and how families handles those situations.

3. Develop case histories on farm transfer illustrating different situations and how they were handled. Using examples of what went wrong is just as important as what was handled well. Work to get these published in agricultural publications.

4. Educate farmers on the problems that occur if they don’t plan in workshops and print media.

5. Develop a network of farmers that could be called on to talk to other farmers about farm transfer issues—what they did, resources they used, problems they addressed or didn’t address.

6. Develop a checklist of issues for farm transfer that need to be addressed so that more farmers understand the need to take action and know what to do.

B. To date one “Passing on the Farm workshop was held on November 15, 2004. Three hundred and eight farmers were invited to attend and 27 farmers participated in the workshop. Information on family, business, legal, farmland preservation, financial, and estate planning issues were provided to all participants, and 358 pieces of information on farm transfer were distributed. Follow-up on action steps taken in a farm transfer will occur in the spring.

C. Five farmers received individualized assistance on farm start-up and/or transfer.

Collaborators: