IDA: An Asset-Building Product for Beginning Farmers
California FarmLink developed the first of these savings accounts for agriculture; they recently trained others on their program
Individual Development Accounts have been around since 1995. IDAs are matched savings accounts designed to help low-income and low-wealth persons accumulate a targeted amount of funds for a specified purpose. The most common use so far has been purchasing homes, forming small businesses, or furthering education.
Account holders generally make a monthly contribution to an account, usually
over a one to four-year period, and their savings are matched by funders. The
match is typically from one to three dollars for every dollar saved. Funds
accumulate in a savings account, which for many is their first experience as an
account holder at an insured institution.
IDAs had grown from three programs in 1995 to more than 500 programs by 2002.
They now encompass more than 20,000 account holders. These matched accounts are
similar to 401 (k) plans, but serve a broader range of purposes. Now, federal,
state, and local governments; the private sector; and nonprofit organizations
can match IDA deposits made by low-income or targeted persons.
California FarmLink created the
first beginning farmer IDA asset building program in 2005. This linking group is
patterned after the Center’s pioneering Land Link program. The main focus of
California FarmLink’s program is to direct the IDA money to farm equipment and
land purchases, particularly downpayments.
Working with Wells Fargo and other banking institutions, California FarmLink
recruited eight clients the first year. The match ratio was three to one. At a
$100 contribution from the client, that entitles the aspiring farmer to $9,600
in 2 years or $4,800 per year.
Participants in this program must attend educational classes and workshops
geared to helping them save money and showing them what farm financing is all
about. Partners in this relationship were the Farm Service Agency and the
Alliance for Land Based Agriculture.
On February 8-10, 2006, California FarmLink hosted training for groups around
the country on their IDA program.
Michael Holton attended from the Center, as did staff from varied
groups and organizations in Michigan, Minnesota, North Carolina, New England,
and Washington state.
The training aligned farming groups around the country to see if the concept of
Individual Development Accounts would work in their regions. The consensus of
the group is that it would work and that each partner should take back
information and begin to design the program.
Beginning farming programs need to diversify their offerings as many of the
traditional methods of helping the beginner have either dried up or are simply
not enough. Adding the potential of an IDA to the portfolio of services offered
in Nebraska for beginning farming makes sense and should be explored.
With the passage of an increase in the Nebraska Beginning Farmer Tax Credit in
2006, IDAs could be another way to entice beginners to save for their future.
There is a future in farming, and with tools like the IDA, we can help make it
happen.
Contact: Michael L. Holton, michaellh@cfra.org
or 402.687.2103 x 1015.
Initiative 300 Is Supported Across the Nation
Organizations and public officials across the nation joined the Center and its Nebraska allies in filing amicus curiae or “friend of the court” briefs in support of Initiative 300 and the State of Nebraska’s appeal to the 8th Circuit Court of Appeals. The State of Nebraska is appealing the December 15, 2005, decision of Federal District Court Judge Laurie Smith Camp finding Initiative 300 an unconstitutional violation of the U.S. Constitution’s Commerce Clause and the American’s With Disabilities Act.
The Farmers Legal Action Group of St. Paul, Minnesota, filed a brief that was signed on to by over 40 national, regional, state, and local rural and family farm and ranch organizations. The Attorneys General of Minnesota, West Virginia, and North Dakota also filed a brief in support of Initiative 300.
The Center, Nebraska Farmers Union, the Nebraska Catholic Conference, the Nebraska Grange, and the Nebraska chapter of Women Involved in Farm Economics – the organizations that originally authored and promoted Initiative 300 – also joined together in filing a brief discussing the history and intent of I-300.
A brief examining environmental issues and I-300 was filed by the Great Plains Environmental Law Center, the Nebraska Sierra Club, the Nebraska Environmental Action Coalition, and the Rural Environmental Action Conservation Team.
Finally, a brief dealing with the Americans With Disabilities Act issues was filed by the Nebraska League of Rural Voters and Nebraskans for Peace. We appreciate the efforts of everyone, and we are grateful for their support of family farms and ranches and rural communities.
Keeping the Family Together in Rural Communities
In examining children and poverty in rural communities, it is clear that we must get at the root of problems despite the barriers
The chances that rural children will live in poverty are increasing. How do we explain this? In examining the question, we found several startling statistics that simply cannot be ignored.
Drop in agriculturally-dependent counties. In 1950, when rural counties were defined by the prevalent income-generating activity, 2,000 counties were considered agricultural. By 1990 this figure had dropped to 556 counties. By the 2000 census, 420 counties across the United States were considered agricultural.
What a tremendous drop. Not only does it reflect the agricultural consolidation that has taken place, it also shows the wide diversity of income-generating activities that account for what can be considered rural throughout the country.
Decline of family structure. One major thread weaving its way through all of America, rural and urban, is the decline of family structure. While urban and rural areas experience similar divorce rates, it is clear that poverty rates for children are higher in rural areas than in urban areas.
Single female parent households in rural areas account for up to 48 percent of children considered in poverty. This compares with 34 percent in urban areas. While both figures are startling and unsettling, the difference is significant.
Teenage pregnancy rates. Another startling statistic that wraps all of child poverty together concerns unwed mothers. Unwed teenage mothers with less than a high school education have a 78 percent poverty rate, while mothers who are married, over 20, with at least a high school education experience only a 6 percent poverty rate.
According to USDA statistics on child poverty, unwed mothers in rural areas tend to have children earlier than those in urban areas. This is also significant in terms of education. Those in urban areas may attend more school and possibly attain a high school education as compared to those in rural areas.
In discussing the decline of family structure, it is not our intent to criticize but rather to point out barriers that have clearly surfaced when it comes to child poverty in rural areas. If we address the root of the problems surrounding child poverty, we may also soften the effect that comes along with the breakdown of the nuclear family.
Contact: Michael L. Holton, michaellh@cfra.org
or 402.687.2103 x 1015 for information.
National Raw Milk Use and Safety Summit
A National Raw Milk Use and Safety Summit will be held on May 26 and 27, 2006, at the Lifelong Learning Center in Norfolk, Nebraska. The purpose of the session is to gather facts to produce a Fact Sheet that covers raw milk use and safety considerations.
Sally Fallon, Mark McAffee, Dr. Richard Franssen and the Nebraska Dairy Group will be on the program.
Several breakout sessions are included in three topic areas – home use, farming, and the science. Find out more by contacting Knox County University of Nebraska Extension at 402.288.5611 or knox-county@unl.edu . More details are available on
www.knox.unl.edu .
The Center for Rural Affairs is one of the event’s sponsors, and Martin Kleinschmit is a presenter. Contact him at
martink@cfra.org or 402.254.6893.
CORPORATE FARMING NOTES
I-300 support widespread; jury decision in cattle case;
Sen. Grassley asks for investigation
>> April 6 – As you read above, the Center for Rural Affairs joined others in a “friend of the court” brief in support of Nebraska’s appeal to the 8th Circuit Court of Appeals of Judge
Laurie Smith Camp’s decision striking down Nebraska’s constitutional prohibition of corporate farming. Briefs supporting Initiative 300 were filed from all over the country.
The strong national support for I-300 demonstrates that this legal battle is not just about corporate farming in Nebraska – it is also about the rights of states to chart their own economic course.
>> April 12 – A federal jury in South Dakota found the nation’s three largest beef packers liable to cattle producers for violating the Packers and Stockyards Act and awarded over $9 million in damages to producers.
The class action lawsuit arose from misreporting boxed beef prices between April 2, 2001 and May 11, 2001. The jury concluded that Tyson, Cargill, and Swift knew of the error before it was made public and engaged in conduct that had the purpose or effect of injuring competition and controlling or manipulating cattle prices.
>> April 13 – In a letter to David Walker, Comptroller General of the Government Accountability Office, Senator
Chuck Grassley (R-IA) revealed mounting evidence that the Farm Program Payments Integrity Act, which prohibits farm program payments to persons not actively engaged in farming, is being routinely evaded to secure farm program payments for passive corporate investors or to circumvent payment limits.
Senator Grassley asked GAO to determine the number of farms that may be organized to avoid payment limitation laws. We eagerly await the response.
Contact: John Crabtree, johnc@cfra.org
or 402.687.2103 x 1010 for more information.
Trends Indicate Online Business Sales Will Grow through 2010
E-commerce and E-Retailing sales grew by over 25 percent in 2005, and indications are that growth in retail sales will continue to expand in the double digits each year at least through 2010. “That means great opportunities for small rural businesses to transform into combination brick and mortar and online business,” shared University of Nebraska Extension’s
Dennis Kahl.
Kahl says that, according to eMarketer and Jupiter Research, instead of worrying about survival, online retailers today are becoming concerned with maintaining their market share due to fast market growth. While the offline retailing market is growing in low single digits, online retailing has doubled in size in the last 24 months to become a $144 billion market.
The challenge for online merchants comes from the fact that after this year the bulk of that growth will come from existing buyers rather than new shoppers. And that means customers are becoming more mature and more demanding when it comes to what they expect from online storefronts.
By 2010, 71 percent of online users will use the Internet to shop compared to 65 percent in 2005. However, online retailers will find it difficult to find new non-buyers to convert. Online retailers will rely more heavily on existing online shoppers to spend more than they have in previous years. That, of course, suggests that e-commerce operations with inefficient order processing and customer satisfaction could be in for tough times ahead.
Over the next five years, offline sales are predicted to grow at a faster rate than online sales. Driving this growth are the 85 percent of online shoppers who said they used the Internet to research their offline purchases in 2005. The message to retailers with a physical store and an e-commerce operation is clear: Seize the opportunity and integrate your offerings now.
To do this, it will be important to learn as much as possible about trends of your business, what is involved in getting your business online, and how to market it. In Nebraska, the Extension service provides eTraining.
To learn more, contact an extension educator in your area. You can reach Dennis Kahl at
dkahl@unl.edu or 402.450.6677.
National Rural Action Network Summer Intern
The Center for Rural Affairs’ Rural Policy Program is looking for a summer intern for the National Rural Action Network. The network is a national grassroots organizing effort spearheaded by the Center to bring attention to critical rural issues in federal policy.
The intern will perform duties related to general media and outreach in key states for the network, under the supervision of the network director and the media and outreach director. Other opportunities to work with policy and media staff may arise as well.
The internship will be located at the Center’s Lyons, Nebraska office. This temporary position, May to August 2006, will pay $5.15 per hour. To apply, send a resume (indicating your availability) to: Tris Darnell, Center for Rural Affairs, PO Box 136, Lyons NE 68038-0136.
Contact: Kathie Starkweather at 402.687.2103 x 1014 or email
kathies@cfra.org.
Before You Buy a Wind Turbine
Energy conservation may be a better way to reduce your energy costs
Folks in the Midwest know about wind and how much it blows. Because energy costs are rising, many look to wind to relieve or reduce their energy bills. Energy can be harvested from the wind, but a cheaper, quicker, and more effective way to cut costs may be to first cut energy use. This is especially true for those who want to go “off grid” and supply all their own electricity.
The challenge of energy conservation is to find ways to get what we want and use less electricity. Start with lighting. If you enter a lit room, understand that all the energy used before you entered cost you money, as well as that used after you leave. If it is an area you often frequent, consider installing fluorescent light bulbs to cut costs. In fact, fluorescent bulbs are now inexpensive enough to replace regular bulbs in most circumstances.
Energy-efficient appliances return dollars spent in savings. The refrigerator, often the most energy hungry appliance in the house, can use between 600 and 1500 watt-hours per day. Be sure to add the 10-year cost of ownership to the purchase price before deciding which model to buy.
Selecting the right appliance for the job can also cut usage and save time. A microwave may draw more power than the stove, but the short cooking time can actually save money. Also, consider the work you want done. A 1400 watt hair dryer can be replaced by a towel if time (and style) is not an issue for you.
Consider the outcome when selecting a power source. Electricity for heating space is a mismatch. The heat from low-quality energy sources like wood, solar, or gas will warm rooms as well as a high-quality energy source like an electric heater. The one-time expense for insulation to keep the heat you buy is probably the best dollars spent.
One of the biggest energy wasters is the “phantom load.” It is power used when an appliance is off, such as the clock on a stove or the TV that operates with a remote control device. Did you know that the little transformer (wall cube) hanging from the outlet that may power your phone, radio, or speakers consumes 20-50 percent its usage when the device is off? The easiest way to reduce “phantom load” is to plug these appliances into a power bar and use the switch.
The conservation message is simple: conservation saves money, replacement generation costs money. Before determining the payback on a new energy device, consider conservation where the payback is immediate. If a wind turbine is still part of your plans for the future, an energy audit will help you decide what size is needed. Minimizing the size of your turbine will minimize your investment.
For more information on load analysis and a wealth of other energy savings ideas, visit the Minnesota Energy Information Center,
www.commerce.state.mn.us and click on Energy Information Center or visit the Iowa Energy Center,
www.energy.iastate.edu.
Contact: Martin Kleinschmit, 402.254.6893 or
martink@cfra.org.
Q&A Questions and Answers
You Asked about Beginning Farmers and Family Farms
Because we work with and write a great deal about Beginning Farmers and Family Farms, the Center for Rural Affairs is often asked to define the two terms.
Beginning Farmer Definition
We like the definition of a beginning farmer that comes from University of Nebraska-Lincoln Professor and Extension Farm Management Specialist,
H. Doug Jose. Professor Jose states, “A beginning farmer can be identified as one who has some farming experience, got started in farming through acquired or leased ground, and is strongly interested in pursuing farming as a career and lifestyle in the future.”
He further identified four typical beginning farmer traits:
- Varying farm size (40 – 1,000) acres.
- One member of the family works off the farm.
- Farming is viewed as a lifestyle.
- Average age is 33 years.
- Environmental consciousness is strong.
For additional information about the Center’s beginning farmer work, please contact Mike Heavrin at 402.687.2100,
mikeh@cfra.org or Wyatt Fraas at
402.254.6893, wyattf@cfra.org .
Family Farm Definition
There are many definitions of a family farm. We subscribe to the definition of a family farm or ranch as one on which the management and the majority of the labor are provided by the family or families that own the production and at least some of the productive assets.
However, we believe that it is more important to decide what system of agriculture we want than to define a category to decide who is in and who is out. We believe it is in the interest of rural America and all of America to have a strong family farm system of agriculture.
The Center for Rural Affairs will be happy to answer questions about our work. Please submit your questions to
Barbara A. Chamness, Director of Administration and Organizational Development, at
barbarac@cfra.org or 402.687.2103 x 1009.
Recap of the Center’s Annual Gathering and Forum
Bristling with booths, workshops, and celebration, a podcast of the Nebraska Gubernatorial Candidate Rural Forum is now
available
On February 25 the Center for Rural Affairs held our Annual Gathering at the University of Nebraska at Kearney. The day began with a small business fair: an excellent cross-section of rural entrepreneur members of the Center’s Rural Enterprise Assistance Project demonstrating and selling their wares.
In the morning, 14 “teach-in” sessions focused on agricultural, small business, and rural issues – ranging from estate planning to community development and from beginning farmers and ranchers to organic gardening.
The Center is working on expanding portions of our Annual Gathering to create a “Marketplace of Ideas.” North Dakota has been holding such an event, the Marketplace for Entrepreneurs, for the last 17 years. It has become very successful, drawing over 7,000 people each year.
We believe the same kind of event, focused on rural entrepreneurship, rural communities, and rural issues, can be built here in Nebraska. We held two listening sessions at the Annual Gathering to explore the level of interest.
Discussion centered around the concept of an Entrepreneurial Fair where new entrepreneurs could meet with established entrepreneurs for guidance and networking and meet with experts from places like the Center for Rural Affairs, the Small Business Administration, USDA, and more.
Participants commented that a freewheeling discussion and exchange of ideas could be extended to other areas of interest to the Center, including community development, beginning farmers and ranchers, farm and ranch innovations, and rural policy.
The Annual Gathering concluded with a rural forum for gubernatorial candidates. We are indebted to the staff of NET Radio, which broadcast the forum, provided a moderator, and assisted with the production of a high-quality event. We deeply appreciate the efforts of Sarah McCammon of NET Radio, who served adeptly as moderator of the forum. Special thanks as well to the panel who assisted Sarah – Don Reeves, Center board president; Robert Pore, reporter, Grand Island Independent; and Mike Konz, editor, Kearney Hub.
Anyone interested in hearing what gubernatorial candidates David Hahn, Dave Nabity, and Congressman Tom Osborne had to say about rural issues at the Center’s forum can, thanks to NET Radio. Download the podcast of the event at their website –
http://publicbroadcasting.net/nprn/news/content/884347.html
.
If you missed this year’s Annual Gathering, consider making plans to attend next year. We think it will be even bigger and better than 2006.
Contact: John Crabtree, johnc@cfra.org
or 402.687.2103 x 1010 for more information.
REAP Provides Equity Awards to Women
Fourteen women micro-entrepreneurs across rural Nebraska will receive a cash equity award from the Center’s Rural Enterprise Assistance Project (REAP) Women’s Business Center. The equity award winners were announced at the Women in Business Benefit banquet on March 29, 2006 in Lincoln, Nebraska in correlation with Women’s History Month.
REAP is one of 15 Local Partners with the national Women and Company® Microenterprise Boost Program.
Glennis McClure, REAP Women’s Business Center Director said, “This is our second year in this project. With the nice boost these awards provided our member businesses last year, we were thrilled to once again be a partner in this national project and help Nebraska women-owned businesses.”
REAP clients selected to receive equity awards in 2006 include:
- Marilyn Capps, MC Tax Prep, Falls City, NE
- Carol Douty, Garden Lane, Milford, NE
- Darla Grace, Your Country Neighbor, Peru, NE
- Sandra Gutierrez, Bilingual Consulting Services, South Sioux City, NE
- Pat Setlik & Connie McFadden, Cottonwood Lane, Loup City, NE
- Rhonda Dowling, RT Fudge, Burwell, NE
- Martha Martinez, Esperanzo’s Creations, South Sioux City, NE
- Carla Mayo, Cedar Creek Steakhouse, Humboldt, NE
- Harriet McFeely, Country Meadows, Hastings, NE
- Lisa Johnson, Lisa Johnson Photography, Oakland, NE
- Angela Rathe, By Design & Upholstery, McCook, NE
- Katrina Schroder, Kats Kritters, Ainsworth, NE
- Ronda Sherman, Sherman & Beel Photo LLC, Johnstown NE
- Denice Swanson, The Drawer, Holdrege, NE
Recipients were selected through an application process coordinated by REAP. The awards can be used for essential business development activities such as marketing, technology purchases, website development, inventory, or professional services.
Funding for the Boost Program is provided by the Citigroup Foundation. Women and Company, a division of Citigroup, provides access to financial education and resources for women and is working with the Association for Enterprise Opportunity (AEO) to implement and promote the program.
Contact: Glennis McClure at 402.645.3296 or
reapwbc@diodecom.net for details.
Rural America and Immigration Policy: Find Appropriate Balance
Rural America would be best served by a balanced approach to immigration.
Immigration should be managed to limit the work force to levels that allow working people to earn decent wages. But we should embrace the immigrants who are here and enable them to become full and contributing members of our communities.
Immigration is just one aspect of economic globalization that has depressed lower tier wages in the United States. As employers move jobs to areas with cheaper labor and the world’s poor move to American jobs, wages of American working people are pushed down toward developing world levels – for both new Americans and those who have been here for generations.
The gap between rich and poor is growing in America. The gap is even growing within the middle class between wage laborers and salaried workers. Self-employed farmers and small business people are also affected. They cannot pay themselves a middle class income for their labor and compete with corporations that can buy labor at poverty-level wages.
Tackling the problem requires effective labor standards in trade agreements to prevent companies and nations from gaining a competitive advantage by exploiting working people. It requires trade and aid policies that help poor nations develop, because desperately poor workers anywhere in the world can be used by global companies to depress wages everywhere.
Effective enforcement systems that hold employers accountable for circumventing immigration law are also part of the solution. In the electronic age, it is surely possible to track the use of phony social security numbers to enable employers to determine the legal status of job applicants and to identify employers that routinely use illegal immigrants.
But as we better enforce immigration law, we would also do well to recognize the benefits of immigration managed at reasonable levels and the importance of assimilating new Americans into our communities.
New families can help build our communities, as did our own immigrant ancestors. We can help by embracing new Americans and inviting them to contribute their time and talents to improving our communities.
We can support political efforts to open pathways for immigrants who have been here and acted responsibly to earn legal status and citizenship. And we can show some understanding with the time it takes to adopt a new language and customs. Our pioneer ancestors held on to their native tongues for nearly a century after settling here.
For their part, new immigrants should embrace the responsibilities, as well as the rights, of becoming part of America. That includes taking steps to citizenship, learning the language, joining in community life, voting, and contributing their time and talents to the betterment of America and its communities.
America was built by immigrants. Today’s immigrants, like those before them, are mostly hardworking people seeking better lives for their families. They can help build a better America if we give them the chance and they embrace the responsibility.
Agree or disagree? Send your opinions or comments to Chuck Hassebrook, 402.687.2103 x 1018 or
chuckh@cfra.org.
FEATURE ARTICLE:
Rural Development and the 2007 Farm Bill
The Rural Development Title of the 2007 Farm Bill should focus on two themes: entrepreneurial development in rural areas and strategies to build assets and wealth for rural people and in rural communities. Both strategies address the persistent, deep-rooted poverty present in many rural parts of the nation. Both strategies address the growing economic disparity between rural and urban areas of the nation. And both strategies address the issues of how to repopulate rural areas and how to ensure the long-term future of rural America.
Entrepreneurship is now recognized by many as the alternative model to traditional industrial and business recruitment. Federal rural policy must begin to recognize the importance of entrepreneurship as a rural development strategy and provide the resources necessary for rural people and rural communities to leverage the spirit, creativity, and opportunities entrepreneurship creates.
Asset and wealth-building strategies are equally important. Greater income alone cannot lead to economic well-being for individuals and families; homeownership, business ownership, or enhanced education lead to important long-term psychological and social effects that cannot be achieved by simply increasing income.
Income, while important, can be achieved nearly anywhere in varying degrees. Assets like businesses and houses bond one to a place and help to build sustainable communities. A commitment to rural asset and wealth-building strategies can lead to stronger individuals, families, and communities.
Agriculturally-based entrepreneurship and innovation must also continue to play a vital role in rural development policy. Agriculturally-based entrepreneurship can contribute to the creation of jobs and businesses in rural communities while promoting a new generation of farmers and ranchers who benefit the development of rural communities and their institutions.
With that vision in mind, we propose the following proposals for the 2007 Farm Bill Rural Development Title.
Small Business and Entrepreneurial Development
○ Creation of the Rural Entrepreneurs and Microenterprise Program would allow rural entrepreneurs to acquire the skills, obtain capital, and build networks necessary to establish new small businesses in rural areas and receive continuing technical assistance as the individuals begin operating the small business.
Under this program, grants would be provided to qualified organizations to provide training, technical assistance, or microcredit to rural entrepreneurs and small businesses. Such a program was included in the Senate version of the 2002 Farm Bill. A similar program should be included in the 2007 Farm Bill with $40 million in mandatory funding.
○ Creation of a Community Entrepreneurial Development Program that offers grants to collaborating communities to establish regional initiatives for entrepreneurial development, including small business education and technical assistance, leadership development, youth attraction and retention, community-based philanthropy, and intergenerational business transfer planning. This program is based on similar projects that are operating in various parts of rural America – HomeTown Competitiveness, RUPRI’s Energizing Entrepreneurs, and the Community Vitality Center at Iowa State University.
Rural Asset and Wealth-Building
Asset and wealth-building strategies allow rural people to undertake activities that have both individual and community benefits. Individuals and families build an asset base that lifts the veil of poverty and dependence on low-wage work. Communities become stronger and more viable as opportunities and ownership are expanded to a wider group of people.
The issues of depopulation, poverty, and low-wage employment facing many rural communities are largely a function of a lack of opportunity in those communities. In order to create a future for those communities and their residents, a commitment must be made to enhance opportunity through the building of assets and wealth.
○ The 2007 Farm Bill should include the Individual Homestead Account provision of the New Homestead Act. Individual Homestead Accounts (IHA) – like Individual Development Accounts employed primarily in urban settings – are matched savings accounts that allow tax-free withdrawals for certain purposes. IHA allowable purposes are costs incurred in developing a small business, expenses related to obtaining higher education, first-time home purchases in qualifying counties, unreimbursed medical expenses, and qualified retirement account rollovers.
The IHA provision, as with other provisions in the New Homestead Act, would apply to rural, high out-migration counties. These counties are also generally those suffering from the greatest economic distress. As such, they are the segments of rural America most in need of hope and opportunity.
Agricultural Entrepreneurship and Innovation
Many farmers and ranchers are pursuing new consumer driven markets for agricultural products, thus creating enhanced economic opportunities in rural communities. By providing resources to farmers and ranchers to supply those markets, issues of agricultural profitability, economic decline, and poverty alleviation in rural communities can be addressed. The 2007 Farm Bill can address these issues and promote agricultural entrepreneurship and innovation by reauthorizing and reforming the Value-Added Producer Grant program and by providing other means to promote and reward agricultural innovation.
○ The Value-Added Producer Grant program (VAPG) was authorized by the 2002 Farm Bill. The VAPG program should be reauthorized and funded at least at the $40 million annual level with mandatory funding status as contained in the 2002 Farm Bill. In addition, the VAPG program should be reformed to contain a priority use for proposals that are most likely to increase the profitability and viability of small and medium-sized farms and ranches and a 10-15 percent set aside of program funding for projects concerning beginning farmers and ranchers.
○ The next Farm Bill should include a Family Farm Innovation Fund to provide seed capital for innovative initiatives to strengthen family farming and ranching opportunities. For example, an agricultural bank in eastern Iowa is sponsoring a series of forums on machinery cooperatives as a means of enabling small and mid-size farms to lower machinery costs to competitive levels. But it takes legal work and research to launch such initiatives. USDA could support such initiatives by providing the Secretary of Agriculture authority to use up to $2.5 million annually for such initiatives.
Beginning Farmers and Ranchers
The future of agriculture depends on the ability of new family farmers and ranchers to enter agriculture. Providing opportunities for beginning farmers and ranchers is also important for rural communities – the viability of rural businesses, schools, and other community institutions are all dependent in part on the existence of new agriculturalists on the land. Extension of 2002 Farm Bill programs and modifications in tax law can provide opportunities for beginning farmers and ranchers.
○ The Beginning Farmer and Rancher Development Program (BFRDP) was authorized in the 2002 Farm Bill. This program was primarily targeted to local, state, and regionally-based networks and partnerships for training, mentoring, linking, education, and planning activities to assist beginning farmers and ranchers. However, the program was only extended discretionary funding status under the 2002 Farm Bill and never appropriated funds to be implemented. The BFRDP should be reauthorized with $15 million in mandatory funding for the 2007 Farm Bill.
○ Escalating land values across the nation have priced most beginning farmers and ranchers out of the market for land, the most valuable commodity in any agricultural operation. The 2002 Farm Bill established the
Beginning Farmer Land Contract pilot program to allow USDA to provide loan guarantees to sellers who self-finance the sale of land to beginning farmers and ranchers. The 2007 Farm Bill should permanently and nationally implement this provision.
Current tax law should also be modified to provide incentives to sellers of land to beginning farmers and ranchers. The prohibition on USDA loan guarantees being used in conjunction with state beginning farmer “aggie” bonds should be removed. Combined with federal
“first time farmer bonds,” which make interest income tax exempt if earned on loans or contract land sales (seller financed) to beginning farmers and ranchers, this would provide a powerful incentive to lend and sell land to beginners and would mitigate the risk to lenders and sellers.
○ California FarmLink has established an Individual Development Account (IDA) program specifically targeted to beginning farmers (see article
at top). The 2007 Farm Bill should institute a similar program for beginning farmers and ranchers nationally. The
Beginning Farmer and Rancher IDA would be a special matched savings account designed to assist those of modest means to establish a pattern of savings and to promote a new generation of farmers and ranchers. The account proceeds may be used toward capital expenditures for a farm or ranch operation (e.g., expenses associated with purchases of land, equipment, or livestock).
Add Your Voice to the Farm Bill Debate
Rural development promises to play an important role in the 2007 Farm Bill as Congress looks for ways to bolster the rural economy. As the Farm Bill debate heats up, it will be crucial for those who support small towns, small business, and family-scale agriculture to speak up. Please help us further develop our rural development agenda and join our
National Rural Action Network to advocate for the future of your community. For more information on our rural development proposals, contact
Jon Bailey, jonb@cfra.org or 402.687.2100.
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