Farm Bill Testimony to U.S. Senate Agriculture Committee

The next farm bill offers America a choice. We can continue the misplaced federal priorities destroying rural communities, or we can invest in creating a future in rural America.

That was the central message in written testimony submitted by the Center to the U.S. Senate Agriculture Committee. We wrote:

“All Americans have a stake in the outcome. America is strongest when all of its communities are strong and all of its people have access to genuine opportunity. Rural America is a valuable part of America. But rural communities are not sharing in the nation’s prosperity. That hurts all of America.

We can create a better future for rural America and with that enhance the rural contribution to a stronger America. There are proven, practical, local strategies working to revitalize 21st century rural communities. But local initiative must be matched by federal policies that support rural revitalization rather than hinder it.”

Full text of the Center's Testimony to the Senate Ag Committee

Contact: Chuck Hassebrook, chuckh@cfra.org or 402.687.2103 x 1018 for information.

Drought Tips from Farmers and Ranchers 
National Drought Mitigation Center asked the experts for advice on persistent drought

Dry conditions have hit parts of the Great Plains again, and some places have had continuous drought for several years. The National Drought Mitigation Center in Lincoln, Nebraska, surveyed farmers and ranchers for their experiences and what they recommend to delay or reduce drought impacts.

“Farmers and ranchers have a lot of experience with drought”, said Cody Knutson, with the National Drought Mitigation Center, “so we asked over 100 of them how they prepared and how we could help.”

Survey respondents reported impacts of reduced water quality and quantity, more pests and disease, more irrigation, higher feed costs, more erosion, reduced cattle conception rates, and more stress on the farmer/rancher. On average, these farmers and ranchers in western and central Nebraska reduced their cattle herds by 30 percent between 2001 and 2004 due to drought.

Impacts are widespread in drought, affecting land, livestock, finances, and families, says Scott Cotton, Extension educator from Chadron. These affect local community economics, the area’s ecology, and future generations of farmers and ranchers.

The respondents used a variety of practices to deal with drought. In order of number of responses, they said:

1. Reduce cattle numbers (culling, early weaning, heifers, feedlots)
2. Grazing management (rotational and modified grazing, leasing more land)
3. Forage production and supplemental feed (hay, interseeding, crop grazing, distillers grains)
4. Develop new water sources/ irrigation (springs, ponds, pipelines, more/less irrigation)
5. Build soil organics and nutrients (cover crops, composts, biodynamic preps)
6. Minimize tillage (no-till, ridge till, zone till, blade plow)
7. Crop rotation, alternative crops, inter-planting (corn, soybeans, wheat, sunflowers, popcorn, alfalfa, millet; drought tolerant; green manure)
8. Financial and management strategies (reduced inputs, record keeping, other income)
9. Prepare a drought plan

When asked what kept them from being better prepared, they pointed to the expense: they either lacked cash-in-hand to make changes or needed to maximize yields to stay solvent.

Suggested solutions included: 1) Expanded or more effective assistance and insurance programs (more cost-share, allow grazing of CRP, more insurance products, reduced paperwork, more proactive assistance), and 2) More education on agricultural sustainability and practices (cover crops, diversity, rotations, and use of drought tolerant crops).

“When I started ranching, I considered myself a cattle rancher,” said Homer Buell, a rancher from Long Pine. “Now I consider myself more of a grass manager, and I focus more on making healthier grass to withstand drought, grasshoppers, and overgrazing. And I rely more on recordkeeping to help me do it.”

Drought conditions and forecast maps, as well as discussions of drought planning, are available from the NMDC website at www.drought.unl.edu. Contact Cody Knutson at NDMC about the survey results (402.472.6718 or cknutson1@unl.edu). Results of the survey and other drought advice were presented in workshops sponsored last spring by the Center for Rural Affairs, National Drought Mitigation Center, UNL Extension, Chadron State College, and USDA Risk Management Agency.

Contact: Wyatt Fraas at the Center’s Hartington, Nebraska, office, 402.254.6893 or wyattf@cfra.org for more information on the drought workshops.

Using Appreciative Inquiry in Rural Community Development
In this method, four D’s focus on a simple way to light the future for us and our communities: discover, dream, design, and deliver

Last month I showed why asset development is preferred over needs development for rural communities. To better understand this concept, let us take a closer look at a community development process called Appreciative Inquiry.

Appreciative Inquiry was actually brought forth in the 1980’s as a tool for community development. AI, for short, gives the community a process to look at themselves and to work with the gifts and talents they have rather than what they don’t have. AI uses a process that incorporates the 4 D’s. They are:

1. Discover
2. Dream
3. Design
4. Deliver

When working with a community, it is often important to discover when the community was at its best. Doing this means taking a step back in the past to look at the history of the community and see why the community existed. Questions that can be answered during this time would incorporate a look at the community’s historical culture.

Next, we can start the process of dreaming. This is where we answer the question, “What is our preferred future?” Dreaming or creating a vision is the most crucial stage in the AI development process. Oftentimes, vision statements are produced during this step.

The next level of development is called the design phase. This step asks the question, “What do we need in place to make our dream a reality?” This step is where resources and tools are located to begin building a new future.

The last step in the AI model is the delivery phase. In the delivery phase, communities set up goals, strategies, and hopefully, projects. The easiest thing to forget in community development is that it doesn’t have to be complicated to shape the future of the community. It just takes coordination and process.

Plato once wrote that it is easy to forgive a child for being afraid of the dark; it is not easy to forgive adults for being afraid of the light. Appreciative Inquiry is like turning on the light for all of us to begin to set a future for ourselves and our communities.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2103 x 1015 for information.

REAP Women’s Business Center Announces Staff Leadership Changes

The Center for Rural Affairs announced a change in staff with the Rural Enterprise Assistance Project (REAP) in late August. Glennis McClure left the Center in early September to work in Community Affairs with the Federal Reserve Bank of Kansas City – Omaha Branch.

Glennis came to the Center in January 1999 as the REAP Southeast Business Specialist. In 2001, she was promoted to REAP Women’s Business Center (WBC) Director and served as Co-Director of the REAP program over the past two years.

Under her tenure, Glennis served on numerous committees and effectively managed and grew the REAP WBC project. Her leadership and hard work played a major part in the overall growth of REAP program over the last seven years.

We’re happy to announce that Monica Braun has been promoted to REAP WBC Director. Monica joined the Center as the REAP Southeast Business Specialist in July 2001 and has served in this capacity since her hiring.

Monica will continue to serve the REAP Southeast 1 region in the near term in addition to assuming the role of REAP WBC Director. Monica’s acceptance of this position ensures continued, high quality service from REAP and the REAP WBC project. We wish Glennis well. 

Contact: Monica Braun at her Seward, Neb. office by phone, 402.643.2673 or email mbraun@alltel.net .    Find out more about REAP

Corporate Farming Notes
Hog confinements closing in on Iowa veteran; Gov. Vilsack acts to protect water and air; western Kentuckians fight industrial hogs

>> As reported in the Fort Dodge Messenger by reporter Luke Jennett, Darwin and Dee Hill have lived on a farm outside Stratford, Iowa, for over 50 years. They also live within two miles of five industrial hog finishing confinements. In July the Hamilton County Board of Supervisors approved a proposal by Swine Graphics, a hog production company based in Webster City, Iowa, to construct a sixth facility less than one mile from their farm.

Jennett writes, “The decisions of who can build a confinement and where are not locally controlled, but dictated by the Iowa Department of Natural Resources … . This doesn’t sit well with the Hills, who think that the county, and its residents, should have the right to determine whether or not more hog factories are OK.”

Darwin Hill, reflecting on his service in the Korean War including time as a Prisoner of War, worried, “but it’ll be the hogs that end up running us off.”

>> Iowa Governor Tom Vilsack recently stood on the shore of Clear Lake to champion a new Department of Natural Resources rule that gives them the power to approve or veto the location of new livestock operations.

The rule took effect August 23 and applies to new or pending permit applications, manure management plans, and proposed construction of livestock operations. On August 8 the Iowa Legislature’s Administrative Rule Committee objected to the DNR rule on a vote of 7 to 2. The objection could provide opportunity for legal challenge of the rule by hog production companies.

“Yesterday, clean air and clean water took a hit,” Vilsack said. “It was an act of political expedience at the cost of clean water.”

>> Western Kentuckians in Fulton, Hickman, and Carlisle counties are challenging the permits for nine industrial hog operations slated to be built there. Each of the operations would have about 5,000 hogs, producing 16 million gallons of liquid waster per year by Kentucky Environmental Cabinet estimates. Petitions were signed by 1,000 people in Fulton County alone, according to local resident and petition signer Jenny Varden.

Contact: John Crabtree at 402.687.2103 x 1010 or johnc@cfra.org for more information.

USDA in a Hurry with the National Animal Identification System
Growing numbers of people are contacting the Center with concerns about privatization, market distortion, and financial implications

For an agency more accustomed to glacial change, USDA’s National Animal Identification System (NAIS) proposal is shockingly fast moving. Since the National Institute for Animal Agriculture task force on animal identification formed in 2002, the meat industry has pushed for NAIS.

Concerns about NAIS are demonstrated by the growing number of calls and letters we receive from across rural America. Virtually everyone who calls or writes wants to know: 1) What can they do to ensure that USDA addresses their NAIS concerns, and 2) What is the Center for Rural Affairs going to do about it?

With the better part of $100 million spent, neither USDA nor Congress has endeavored to include farmers, ranchers, and rural citizens in the NAIS discussion. Before long, policymakers are going to wish they had asked for your input, so we should all get prepared now.

OUR CONCERNS WITH NAIS PRIVATIZATION

We have grave concerns about NAIS privatization. Privatization invites bias, especially in a mandatory system with poorly defined statutory authority, and could lead to the system being distorted in favor of packers and processors. This is especially true for privatization through National Cattlemen’s Beef Association and the National Pork Producers Council, who have demonstrated an historical bias towards packers.

Data collected through any animal identification system should only be accessed for official disease investigations by appropriate government agencies and should never be accessible to packers and processors. The use of animal identification data to create any market distortion or discriminate against small and mid-sized farmers and ranchers should be strictly prohibited.

Financial burdens of any future system that must be born by producers must be born equitably and not create higher per-head costs for small and mid-sized farmers and ranchers. Waivers or exemptions for large, industrial livestock operations should be prohibited.

Animal identification for the purpose of keeping food safe has merit. But USDA is proposing a system too easily corruptible and discriminatory to family farmers and ranchers. Call your congressional delegation and urge them to provide leadership on these issues. And call on Secretary of Agriculture Mike Johanns to address the concerns of farmers and ranchers before proceeding any further with their flawed plan.

Contact: John Crabtree, 402.687.2103 x 1010 or johnc@cfra.org for questions or comments.

Windmills Across Nebraska

As the Windmill Project gains momentum and excitement, the Center is receiving truly interesting stories and poems of the impact of windmills in the lives of the authors. The following poem was written in 1987 by Dorothy Hillen of Leigh, Nebraska. It evokes the sounds and visions and tastes and memories that lead us from the past to the present to the future as we focus on renewable energy and new life for our communities.

SONG OF THE MILL

The windmill creaks,
As though in labored breath;
Its pumprod squeaks,
Now old, and nearing death.

In days gone by
It twirled its trusty rounds;
Up towards the sky
It joined the country sounds.

Pumping earth-cold water,
To quench the thirsty mouth;
Flowing life to gardens,
Parched by summer drought.

Cows jostled and bawled
For a space at the tank;
The water so soothing
To tongues as they drank.

Man and beast labored,
Sweat running at will;
Yet both were refreshed
At the foot of the mill.

’Twas a tower to climb 
When disaster struck
Spotting a trail of smoke –
The neighbor’s bad luck.

It was the weather vane,
With wind twisting its tail;
Helpful to the farmer,
For him – it dared not fail!

In shifting winds …
It creaked and groaned.
In childhood dreams …
A creature moaned.

Oh, for the song
Of that creaking mill,
When I was a child
And time stood still!

Contact: Barbara Chamness at 402.687.2103 x 1007 or barbarac@cfra.org.

Reflections from a Summer Intern
Ed note: Wayne State College senior Rhea Landholm volunteered to share her thoughts about her experience as a summer intern at the Center. This was written right before she retuned to college. From Comstock, Nebraska to North Dakota, Rhea has been on the move for rural America.

As my internship draws to a close, I am sad about leaving, but I am also very excited to go back to school with the knowledge I have gained this summer. I am very lucky to have been hired for a part-time job this fall at the Center, so I will not be leaving for good.

The most important thing I have learned is that each project at the Center is a team effort; a single entity cannot possibly do all the work. This means that most staff members are involved in numerous projects.

I have been chatting with economic developers, chamber presidents, and legislative candidates on the phone all summer long. With this, I have realized the efforts of each and every rural citizen in Nebraska and beyond. Everyone is working for the same thing, to allow their community to thrive and survive.

The best part of my internship was the opportunity to accompany Kathie Starkweather on a visit to North Dakota. We spoke to numerous economic developers, held two town hall meetings, and spoke to the editorial boards of the Grand Forks Herald and the Fargo Forum. It was a triumph witnessing their understanding of the farm bill rural development proposal, and exciting to see what they have done for their own communities.

Before this internship, I am sad to say I didn’t quite understand the efforts of the Center for Rural Affairs. I knew they helped farmers and small towns, but I wasn’t sure how they helped, or even exactly what they did. I now understand that the Center helps all the components of rural America, and they fight for rural America.

I am proud to be a part of this organization’s efforts and am in awe of how large the hearts of the staff members are. They really are working for the greater good of rural America, but aren’t looking to take away from urban America. They live by the Center’s mission: To establish strong rural communities, social and economic justice, environmental stewardship, and genuine opportunity for all while engaging people in decisions that affect the quality of their lives and the future of their communities.

Contact: Rhea Landholm at 402.687.2103 x 1021 on Mondays or email rheal@cfra.org.

Rural Entrepreneurial Fair and Conference Coming in February
Our new conference, MarketPlace – Opening Doors to Rural Success, will focus on building jobs and the rural economy from within

Entrepreneurial activity is a key to rural community growth and sustainability. The Center supports this focus throughout our programs.

We work directly with micro businesses (those with five or fewer employees) and with agricultural entrepreneurs (in cooperatives, direct marketing, organic agriculture). Our research and policy work advocate for policies that open opportunities for growth in rural areas through entrepreneurship.

As an expansion of our belief in this means of community and economic development, we are sponsoring a new one-day conference, MarketPlace – Opening Doors to Rural Success at the Ramada Inn in Kearney, Nebraska on February 28, 2007.

The conference is modeled after one held in North Dakota for the last 18 years, Marketplace for Entrepreneurs. It draws between 7,000 to 10,000 people every year and has had great success in new small business development and job creation throughout the state.

Our MarketPlace can be likened to an entrepreneurial fair. A core piece of the event will bring together successful entrepreneurs and service providers in one location for networking. Prospective entrepreneurs will be able to meet with these folks in a “safe” environment to ask questions, gather information, and make connections. This aspect of the North Dakota event has proven extremely beneficial.

In addition, we will have a series of teaching tracts throughout the day – from 30-40 training opportunities – anything from “How to Write a Business Plan” to “How to Market your Business.” Simultaneous tracts will be offered with sessions focused on agricultural entrepreneurship, youth entrepreneurship, community development, and rural issues and policy.

We will be holding listening sessions throughout the state beginning in October to make this event as valuable as possible to participants. We want to know your opinion on these questions:

• What types of teaching tracts are most in demand?
• What are the new developing businesses across the state?
• What types of businesses and service providers would budding entrepreneurs like to see involved in the MarketPlace?
• How can this event best serve the needs of entrepreneurs?

Our MarketPlace will also focus on entrepreneurial communities – what they are, why they are important, and how to become one. Being an entrepreneurial community is an important component in successful small business development, yet we often do not have the capacity to be successful at that.

Free advice from experts such as attorneys, CPA’s, etc. – a panel of experts – will be available throughout the day to answer questions. We plan on making this not only a successful event, but one that helps new businesses get started throughout the state.

Host a MarketPlace Listening Session: Would you like to have a listening session in your community? If so, please contact Monica Braun, 402.643.2673, mbraun@alltel.net or Kathie Starkweather, 402.687.2103 x 1014, kathies@cfra.org.

Notables this Month

HEALTHY FARMS CONFERENCE IN FEBRUARY -- Plan now to attend the Nebraska Sustainable Agriculture Society’s Annual Healthy Farms Conference on February 9 and 10, 2007 in cooperation with University of Nebraska Extension’s Rural Advantage Program. The conference will be at the Divots Conference Center in Norfolk, Nebraska.

The conference features keynote speaker Dan Imhoff, President of Wild Farm Alliance as well as tracks on the food and health connection, alternative energy, alternative/diverse crop and livestock, and a kids’ program. Details will be posted as they become available at the NSAS website: www.nebsusag.org .

CENTER EXPANDS STAFF -- This month we welcome a new face to the Center’s Lyons office. Dan Owens is our new Rural Policy Program organizer and advocate. He is in the process of setting up town hall and regional meetings with a focus on helping to build the National Rural Action Network.

Dan is a relatively recent graduate of Indiana University with majors in history and political science. His hometown is Bloomington, Indiana, and he has moved to Lyons. We’re pleased to have him as a strong addition to the Center’s team. You can reach Dan at 402.687.2103 x 1017 or email dano@cfra.org .

NEW BOOKS ON SUSTAINABLE & ORGANIC AGRICULTURE -- Organic Dairy Farming: A Resource for Farmers, edited by Jody Padgham, a cooperative project with Midwest Organic & Sustainable Education Services (MOSES), Organic Valley Family of Farms/CROPP, and the U.S. Humane Society. Twenty-one experts contributed to the book, which presents organic concepts and practices in a readable form. Contact MOSES at 715.772.3153 or jody@mosesorganic.org to order ($14.95 plus shipping & handling).

Lessons in Nature: 50 years of Organic Advice from the Southwest’s Foremost Composter, Gardener, Farmer, features practical techniques, inspirational philosophy, and essays about organic gardening, soil building and management, pest and weed control, and planting and growing from Malcolm Beck. Order from Acres U.S.A., 800.355.5313 or cindy@acresusa.com ($20.00 softcover).

Grass, the Forgiveness of Nature, by Charles Walters, founder and executive editor of Acres U.S.A., a 35 year-old publication focusing on eco-farming. Walters asserts that “grass may be the most important plant in the world in terms of nutritive content, function within the eco-system, and even medicinal properties.” Order from Acres U.S.A., www.acresusa.com  ($25.00 softcover).

Energy, Climate Change Call for Shared Sacrifice for Common Good
Mounting challenges will only be solved when incentives to curb consumption are combined with new innovations and brain power

We confront challenges today that test our mettle and our character – that call upon us to look beyond our short-term self interests to the greater “common good” and future generations.

The capacity to look beyond our immediate self-interest is essential in a democracy. Thomas Jefferson believed that the instinct to do good for others was the fundamental human trait in which all were created equal. It was the foundation of his belief in democracy.

But our political discourse today is largely devoid of calls to sacrifice for the greater good – even when it is clearly needed.

The intertwined issues of energy and climate change are a case in point. Americans are hurting from record high fuel prices and threatened by declining supplies. We need innovation and brainpower to develop new energy supplies. But we must also consume less.

It will take time and money to develop alternative energy sources. And there is a fundamental problem with proposals to aggressively tap new and abundant fossil fuel sources such as oil sands and oil shale. There is mounting evidence that burning fossil fuels contributes to global warming and climate change.

We cannot accurately predict its full effect. But we know with certainty that increased burning of fossil fuels at least intensifies the risk of extreme weather events and damage to agriculture. That should give us pause. Our energy policy must include strategies to reduce our consumption of fossil fuels. But rarely are we called to do so.

Growing inequality also tests our national character. Global inequality is extreme. As citizens of the world’s most powerful and wealthy nation, we have a moral responsibility to respond. Even within America, wealth and income concentration are at historic levels. A substantial segment of working and self-employed Americans are falling behind.

Global inequality makes the world less secure. And inequality within weakens America. As fewer people share in the America dream and gain a stake in the future, fewer will have a reason to give back to their community and take responsibility for the future of America. History demonstrates that extreme inequality leads to social decline. Democracy cannot flourish in its midst.

These problems can be solved if we are willing to look beyond our own immediate interests to the common good. The wealthy within America should accept some sacrifice to ensure that all share in our prosperity. If it’s good for America, it is ultimately good for them too.

Ordinary Americans should look beyond our immediate interest to support steps to help the desperately poor around the world better their lives. A more just world is a more secure world. We all have a stake in that.

We can meet these challenges if we are willing to sacrifice for the greater good. I believe many Americans are just waiting for the call.

Agree or disagree? Send your opinions or comments to Chuck Hassebrook, 402.687.2103 x 1018 or chuckh@cfra.org.

FEATURE ARTICLE:

Higher Education and Rural America: A Widening Education Gap

For years people have discussed how to reverse the rural “brain drain” – the outmigration of the most educated from rural communities. Discussions usually focus on the general decline in population. Yet, there is a specific, underlying concern about the loss of young people and young families, particularly the college-educated. While states and localities are striving to reverse the “brain drain,” it is clear there is an education gap between rural and urban America, and it is widening.

On average, residents of nonmetropolitan areas have significantly lower educational attainment levels than residents of metropolitan areas. According to U.S. Census Bureau data, of residents 25 years old and over, more than 37 percent of metropolitan area residents have at least an Associate’s Degree compared to 25 percent of nonmetropolitan residents.

This education gap begins to significantly diverge at the Bachelor’s Degree level. High school graduation and Associate Degree attainment levels are nearly identical. Nineteen percent of metropolitan residents and 11 percent of nonmetropolitan residents have Bachelor’s Degrees. Nearly twice as many metropolitan residents hold advanced and professional degrees.

However, getting more rural high school graduates to attend college will not increase their likelihood of remaining in rural communities. In fact, based on existing data, these college-educated rural residents are more likely to remain in or relocate to the urban areas in which their education is obtained.

Further, many rural areas are unable to compete for college-educated residents. College-educated workers can command more from the labor market in urban areas than in rural areas. And, as Anastasia Snyder, Assistant Professor of Rural Sociology at Penn State University asserts, once a four-year college degree is obtained one enters the national labor market.

The range of employment opportunities for college graduates expands beyond the local. Therefore, according to Dr. Snyder, efforts to retain or recruit college-educated residents and workers to rural communities will be largely inefficient because of a lack of employment opportunities that would appeal to a young, college-educated labor force.

EFFECTIVENESS OF INCENTIVES TO BRING COLLEGE EDUCATED YOUTHS BACK 

This brings into question the use of incentives for college-educated workers and residents to “come home” or relocate to rural communities. There will always be opportunities in rural communities for some college-educated vocations and entrepreneurs. 

Yet, it is difficult to gauge the potential affect of policy proposals such as those in the New Homestead Act that offer incentives for the college-educated to return to rural communities or the Individual Homestead Account matched savings accounts for higher education.

Because of the nature of New Homestead Account counties – generally remote and a great distance from an institution of higher education – it is questionable how many eligible individuals will be able to take advantage of Individual Homestead Accounts for education purposes. Further, if individuals in qualifying counties use an Individual Homestead Account for higher education expenses, data and history tell us that few of them will return to their rural communities.

All is not lost, however, for an educated rural population and workforce. While only 8 percent of nonmetropolitan residents over 25 have Associate Degrees, that percentage is slightly higher than for metropolitan residents. The growing presence of community colleges and vocational training institutions in rural areas makes this an attractive investment.

EXPANDED ROLE FOR COMMUNITY COLLEGES AND VOCATIONAL TRAINING 

Holders of Associate degrees and technical education are also less likely to leave rural areas than recipients of four-year degrees. Recipients of two-year degrees also earn nearly 13 percent more than do workers with only a high school diploma. An active investment in post-secondary community college and technical training can help to resolve both the rural “brain drain” and the rural-urban income disparity.

There are many ways to invest in higher education for rural people. State, regional, and local governments can strengthen rural community colleges and expand community college networks in businesses, communities, and rural secondary schools. Communities can provide assistance to local people to obtain community college education and technical training through, for example, scholarships from local community foundations. Most scholarships are now provided to rural students seeking a four-year degree who most likely will not return to rural communities.

Rural communities still need teachers, nurses, doctors, and other professions requiring four-year degrees. Investment in education for those purposes should still be encouraged. However, local efforts and investments should also focus on education and training of those who will remain in or are already in the community.

Finally, federal policy such as the New Homestead Act should be targeted to training and skills not connected to institutions of higher education, but which in turn will benefit local economies individually and collectively.

Source: This is another installment in our articles on asset and wealth-building policy for rural America. For more information and reports on rural asset-building and rural development, see the Rural Development and Rural Asset-Building Virtual Library 

New Farm/Ranch Transfer and Estate Planning Publications

Two new publications have been added to the Center’s Risk Management Workshop Series on farm and ranch transition. Successful Farm/Ranch Transitions and Farm and Ranch Estate Planning provide introductions to those topics.

UNL Extension Transition Specialist Dave Goeller and attorney Joe Hawbaker authored these publications, as well as several on detailed aspects of these subjects we made available last spring. Both Goeller and Hawbaker have years of experience advising farmers and ranchers as instructors with the Nebraska Department of Agriculture’s Legal/Financial Clinics.

SUCCESSFUL FARM/RANCH TRANSITIONS

Goeller’s Successful Farm/Ranch Transitions covers the process of gradual management exchange between generations, whether within family or not. He describes the importance of goal setting for each generation and sharing expectations. Goeller fully explores aspects of farm financial viability – income and expense efficiency, debt structure, and family living expenses – which are essential for supporting one or more families.

Many farm/ranch families will see themselves in the scenarios Goeller describes, such as the rising age of farm/ranch owners, swelling costs and stagnant net income, creeping family living expenses, and shrinking profit margins. In spite of these obstacles, he paints a picture of how and why families can create a viable succession plan.

Goeller pinpoints the optimum stage in the farm/ranch business life cycle to bring a new person into the business. That stage is near the ‘maturity’ of the business as the owners simultaneously lose energy for business-building yet are keenly aware of new opportunities. ‘Fresh legs’ at this stage of the business can sustain growth and expand the business enough to support additional families.

A particularly useful part of the publication is Goeller’s breakdown of the farm ownership and transition process into manageable parts. He describes the farm as consisting of labor, management, income, and ownership. The transition process can include testing, commitment, establishment, and withdrawal phases. He shows how to chart these so the transfer of each segment can be designed and scheduled to meet the needs of each generation.

Goeller ends the publication with questions to consider in estate planning that support the farm or ranch transfer. Hawbaker’s introduction to Farm and Ranch Estate Planning expands on those questions.

FARM AND RANCH ESTATE PLANNING

Hawbaker also begins with the importance of goal setting in the estate planning process, but emphasizes a number of legal issues that affect the farm/ranch owner’s estate. These issues are discussed in legal terms such as unified credit, joint tenancy, life estate, etc. that are clearly explained. Other topics in the document include cash flow, taxes, control of assets, succession planning, and treatment of heirs.

Many estate plans are based on fear of estate taxes, according to Hawbaker, because the tax rates are high. However, he describes how most farm/ranch estates actually face little, if any, estate taxes if basic steps are taken before the death of the farm/ranch owner. Those steps include identifying the size of the estate, maximizing the ‘unified credit’ for the spouses owning the estate, and making plans to distribute any assets in excess of the unified credit tax exclusion.

Capital gains taxes on real estate are also manageable, says Hawbaker. Time-of-death transfers of real property wipe out capital gains appreciation under current law, but he warns that the rules are likely to change, so consulting with a tax advisor is warranted.

Probate, or legal analysis of the estate distribution, is another issue folks typically try to avoid. Hawbaker explains why probate may be unavoidable (as in Nebraska) and why it may be a useful event. One example is that probate limits the time creditors are able to place claims on the estate.

Hawbaker also describes the issues surrounding long-term care and Medicaid coverage. He describes several strategies for covering the costs of long-term care that may or may not protect the integrity of the farm/ranch property. He notes that it is ‘critically important’ to follow the stringent new rules surrounding Medicaid eligibility that Congress passed in February 2006, particularly rules around the new 60-month look-back period for asset transfer.

Hawbaker concludes that both estate owners and their heirs are more likely to be satisfied with the estate plans if those plans are made known while the owners are still alive. Other late term issues can be eased if power of attorney and health care directives are established before their need arises.

These new publications and the rest of the Risk Management Workshop series (Business Structures, Piercing the Corporate Veil, Long Term Care, and Medicaid Planning) are available for download from the Center’s website. Or you can request a copy by calling our Hartington, Nebraska, office (402.254.6893). These publications were funded in part by a grant from the USDA North Central Center for Risk Management Education.

Contact: Wyatt Fraas in the Center’s Hartington, Neb. office, wyattf@cfra.org or 402.254.6893 for more information.

Editor: Marie Powell, mariep@cfra.org