Family Farm Inheritance: Problems with Generational Farming
Reading Time: 6 minutes
Learn about family farm inheritance problems concerning generational farming and ranch succession in today’s economy.
by Kashava Holt
Have you ever wondered why so many farmers and ranchers refuse to participate in the farming industry? Often, it’s due to city and state laws and regulations. Some wonder how we’ve reached this threshold with low-quality food systems in rural and urban areas.
Unfortunately, generational farming has undergone different growth phases due to specific laws and regulations created to protect the general population. From the 1900s until the present, we’ve had many changes in the farming landscape that have affected the resiliency of local farming. Building permits and zoning laws have been created to minimize agriculture, conservation, and sustainability efforts in rural and urban areas. These drastic changes have affected the confidence and durability of farmers’ ability to generate income and cover expenses.
Farmers enrich local areas by providing dairy, fruits, livestock, and vegetables at an affordable price for the community. Many corporations that produce agricultural products have no connection with the people in rural or urban areas. Being an established farm that’s created trust in the community by utilizing safe, sustainable practices is essential. In the 1970s, dozens of news publications documented a loss in local dairy farmers nationwide due to low prices set by the government and industry regulators. Farmers who produce corn and soybeans have also felt a dramatic decline in revenue because of low prices, despite subsidies.
Financial Struggle and Loss
Many farmers struggle due to financial and weather-related issues. Farmers and ranchers living in areas prone to wildfires deal with heartaches that are often hard to recover from. Natural disasters like drought, flooding, hurricanes, tornadoes, and wildfires contribute to the significant yearly losses that generational farmers endure.
Because some farmers may have less than optimal credit, accessing loan capital for stabilizing farm operations is sometimes tricky. In our American farm history, thousands of farmers have been denied the right to participate in the loan process for many reasons too varied for the scope of this single article.
One of the main issues with farming or ranching operations is having adequate funding to invest in equipment, land, and water resources. Having a farm allows families to generate income and a nutrient-rich food source. Due to rising inflation costs, some farmers have no choice but to work multiple jobs to support the family farm.
Land has significantly increased in value, and this has caused an increase in inheritance tax for farmers and ranchers. When a farmer inherits investment assets, such as farmland, equipment, or retirement funds, the IRS will reset the asset’s original cost basis to the current value of the inheritance to date. Ultimately, the heir will pay capital gains tax unless a loophole is identified to minimize the overall tax bill. Increasing land values also mean that it’s very challenging for beginning farmers to afford land.
Farming is hard work; it takes a unique individual to sacrifice time for the sake of others. It’s a blessing when you can provide for your family and create a meaningful legacy in the community with safely produced foods or livestock. However, making memories with your family and continuously building lasting relationships in the community from the demanding work in the field is invaluable.
Cost of Regulations
The main issue I recognize after speaking with farmers and ranchers is the amount of money, paperwork, and time needed to complete the required third-party audit. In urban areas, many people live in food deserts. Creating more funding for farmers in cities will boost the economic farming sector, and the government has recently reduced income requirements for some programs.
The federal food and safety regulations for raw foods can be challenging to meet. When selling large amounts of natural produce to most grocery stores and restaurants, they require third-party audits to secure contracts to ensure food quality standards. Some producers must undergo multiple inspections to pass audits to satisfy corporate grocery store chains or schools. The Food Safety Modernization Act (FSMA) was passed by Congress in 2011 to allow the Food and Drug Administration (FDA) the ability to locate contamination within a specific food system through auditing. However, small farms, based on income, are exempt from specific requirements.
In 2024, new changes to FSMA were proposed to significantly reduce foodborne illness. The FDA expects the cost for implementing the new changes to small farms to be about $4,500 to $12,300, and for large farms, it’s about $30,000. The size of a farm can be evaluated based on the amount of business done annually or quarterly. Farms that sell less than $25,000 a year qualify for exemption from the law, as do farmers or producers that sell directly to the public. Unfortunately, if you sell to a third party, you’ll have to pay any related fees associated with your income.
Annual inspections at your farm can present unexpected results at any moment, and this can cause uncertainty for producers. Food inspectors can shut a farm down overnight because of contamination or related foodborne illness. Animals on the farm site can present several toxic intestinal pathogens like Campylobacter, Escherichia coli, and Salmonella. These pathogens can quickly become contracted from a person’s diet, environment, or an infected pet.
Corporations and Foreign Interests
Yet another threat to family farms is large corporations and foreign countries buying large amounts of land and implementing unsafe farming practices. These corporations and foreign investors have the funds to pay any audits, certifications, fines, taxes, or other sudden financial crises. This has created a farming environment so expensive that many small-scale farmers are becoming discouraged.
This paradigm makes the farming industry more challenging for the average person. In addition, the price of land and supplies, fuel, animal feed, insurance, and more necessary for farming has skyrocketed, and this increase is contributing to the collapse of our local farming industry.
The farming practices of these profit-driven corporations near residential areas is another issue. Many corporations may use chemicals unsafely, creating a hazardous environment for animals, humans, and public waterways, and there is no quick fix for the environment. These hazards can result in fines from the Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OHSA), but more oversight is needed. If you’re curious about spills in your area, public records are available on the EPA website.
Fragile Food Systems
More grants, incentives, and tax breaks must be given to existing and new farmers. The cost of living has increased significantly, preventing many farmers from establishing successful businesses to cultivate the community. If we want to see more generational farmers, we must support our local farms.
The modern-day farmer or rancher needs more than one way to generate income because certain aspects of the farming industry can quickly become volatile. A farmer’s daily risk with their operations requires a winning spirit to stay motivated. Most people who pursue farming or ranching only sometimes start with everything needed to be successful. However, over time, a dedicated and driven person can find ways to generate cash flow in such a declining market. One of the main reasons we need local farmers is to establish more sustainable practices to protect our regional food systems.
One of the biggest things that’s changed over time is the way many of us eat and obtain food, mainly relying on grocery stores and restaurants. With so many grocery stores buying cheap fruits, honey, meat, and vegetables from large corporations in different states or countries, product quality becomes a problem. Many people find fast food convenient because it’s affordable and within reasonable driving or walking distance. The disconnect between the customer, farmer, and distributor has created a lot of uncertainty in the quality of most produce and products.
Having generational farmers creates a more reliable, sustainable, and trustworthy relationship between the land and the community. When you have a real, personal connection with your local producers, you can more easily identify any issues that may be present. Supporting local farms allows farmers to grow more nutrient-rich local foods to reduce our communities’ carbon footprint and smog. A relationship with your local farms can provide more insight into the best choice for you and your family. The economic isolation of farmers and ranchers has created the fragile food systems that many of us see today.
Looking to the Future
Expecting things to improve year after year is unrealistic when a minimum effort is made within most communities. The profit over community culture in the U.S. is a cancer that’s diminished the integrity of businesses. We might look to European countries that have stringent rules and regulations to protect their people from chemicals and contamination.
We can change our food systems locally by creating grassroots movements and purchasing locally sourced produce and products from farmers or ranchers. Surprisingly, the type of neighborhood you reside in may determine if you can grow food. Homeowners Associations often prevent residents from growing gardens. Eating healthy needs to be prioritized regardless of curb appeal and property value. Buying produce from your local farms that practice sustainable farming practices will help support farmers passionate about providing the community with nutrient-rich foods. Now that gardening and farming are becoming more popular, we all can change the course of history.
Kashava Holt seeks to empower urban residents with farming education, land, resources, and access to fresh organic food. Through the nonprofit Akron Urban Agriculture, he works to provide healthier foods to communities in urban areas.
Originally published in the July/August 2024 issue of Countryside and Small Stock Journal and regularly vetted for accuracy.
