The Obameter

Give tax incentives to new farmers


Obama "will also provide tax incentives to make it easier for new farmers to afford their first farm. Obama will increase incentives for farmers and private landowners to conduct sustainable agriculture and protect wetlands, grasslands and forests."


Sources:

"Blueprint for Change"

Subjects: Agriculture, Taxes

Updates:

No tax incentives for new farmers, and less spending on conservation incentives than authorized

Updated: Wednesday, November 28th, 2012 | By Louis Jacobson

During the 2008 presidential campaign, Barack Obama pledged to "provide tax incentives to make it easier for new farmers to afford their first farm” and said he would also "increase incentives for farmers and private landowners to conduct sustainable agriculture and protect wetlands, grasslands and forests."

Judging the first part of this promise -- tax incentives for new farmers -- is straightforward.

"He didn't propose any. Congress didn't pass any,” said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition.

The second part -- increasing incentives for sustainable agriculture and protection of wetlands, grasslands and forests -- is a bit more complicated.

Looking at the raw dollar figures shows increases between fiscal years 2009 and 2012, followed by a dip in 2013 (though at a level higher than when Obama entered office). Here's the year-by-year funding for the Agriculture Department's "Farm Security and Rural Investment Programs,” which include such programs as the Wetlands Reserve Program, the Environmental Quality Incentives Program, the Wildlife Habitat Incentives Program, the Conservation Stewardship Program and the Grasslands Reserve Program:

Fiscal year 2009: $2.17 billion
Fiscal year 2010: $2.95 billion
Fiscal year 2011: $3.22 billion
Fiscal year 2012 (estimate): $3.57 billion
Fiscal year 2013 (estimate): $3.30 billion

That's a rather substantial increase: Even taking into account the projected decline in 2013, that's still better than a 50 percent increase since Obama took office.

But there's a catch.

These dollar figures are "mandatory funding” -- essentially an entitlement -- that were set by the 2008 Farm Bill, which was passed before Obama took office. Hoefner said that Obama's budgets have consistently called for lowering the increases mandated under the 2008 Farm Bill. So while the numbers have generally gone up under Obama, they've gone up by less than they might have otherwise.

"What the president's budget proposed was for the appropriators to go in and reduce funding already approved and paid for by the authorizers,” Hoefner said. "The appropriators complied, to varying degrees in different years. … In essence, Agriculture Committee Farm Bill money was turned into Appropriations Committee money through a backdoor mechanism fully endorsed and prodded on by the Administration.”

This part of the promise, then, saw steadily increasing expenditures, but at lower levels than were authorized.

Combining the failure to offer tax incentives for new farmers with efforts to pare back on funding levels set under his predecessor in the White House, we rate this a Promise Broken.

Sources:

Agriculture Department, "Explanatory Notes: Natural Resources Conservation Service," fiscal year 2011

Agriculture Department, "Explanatory Notes: Natural Resources Conservation Service," fiscal year 2013

Email interview with Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition, Nov. 27, 2012

Aid for new farmers but not federal tax incentives

Updated: Wednesday, February 16th, 2011 | By Abby Brownback

"To make it easier for new farmers to afford their first farm,” President Barack Obama promised tax incentives for beginning farmers. These have yet to materialize, and the steep cost of land -- more than $5,000 per acre in Iowa -- can bar young would-be farmers from entering the profession, said Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition.

Although federal tax incentives are not yet at hand, White House and U.S. Agriculture Department media representatives point to other steps the administration has taken to create incentives promoting sustainable agriculture, some of which also make it easier for new farmers to acquire land.

A White House spokeswoman noted that Agriculture Secretary Tom Vilsack testified before the Senate agriculture committee in June 2010 that the 2012 Farm Bill should include a goal to add 100,000 new farmers. The Des Moines Register reported on the hearing.

On the sustainability front, in September 2010, the USDA began offering loans of up to $300,000 to farm owners and operators who need capital to implement conservation practices, according to a USDA press release.

Other USDA programs, including the Conservation Reserve Program, the Conservation Stewardship Program, the Environmental Quality Incentives Program and the Wetlands Reserve Program extend financial and technical aid to farmers, ranchers and landowners who implement conservation practices. The administration, in its FY 2011 budget proposal, requested about $5 billion for these programs. In FY 2012, the administration also proposed budget increases for those programs, including $145 million above the FY 2011 estimate for the Conservation Reserve Program.

Through CRP, landowners agree not to farm certain acreage for 10 to 15 years in exchange for annual payments from the federal government, said Jeff Ward, chairman of the National Council of State Agricultural Finance Programs. The contracts on more than 4 million acres will expire this year, and -- to help bring new farmers into the profession -- the Farm Services Agency has offered two additional payments to owners who rent that land to beginning farmers. Landowners already have committed to transition 54,000 acres to new farmers, according to a USDA spokesman.  

President Obama included in his FY 2011 budget some increases in funding for the Sustainable Agriculture Research and Education Program, the Rural Microentrepreneur Assistance Program and the National Organic Program, among others. But in the president"s FY 2012 budget, proposed funding for these initiatives, which support beginning farmers, conservation practices, organic food regulations and research remained level or decreased.

The Rural Microentrepreneur Assistance Program receives $4 million each fiscal year per the 2008 Farm Bill, said Steph Larsen, of the non-profit Center for Rural Affairs, which oversees the program. However, the president"s FY 2012 budget includes just $3 million in mandatory funding for these loans and grants for rural small businesses plus $6 million in discretionary spending, down from the $8 million President Obama requested in FY 2011. As of October 2010 -- farmers may apply for the small business loans.

The $50,000 cap on the rural small business loans won"t buy farmers much land, Larsen said, but "beginning farmers these days tend to be smaller-scale, not commodity crops. They tend to be alternative, specialty crops like fruits and vegetables.”

There are state tax credits available to some new farmers. Iowa, Nebraska and Wisconsin  provide a tax credits to landowners who rent to a beginning farmer, and Hoefner said the idea of a federal tax credit isn't  "outside the realm of possibility” -- because of the political support it could garner from members of Congress from farming states -- if the 112th Congress were to take up a major piece of tax legislation.

Still, with no federal tax incentives for new farmers on the horizon, we"ll continue to rate this promise as Stalled.

Sources:

Interviews with Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition

Interview with Steph Larsen, assistant director of organizing for the Center for Rural Affairs

Interview with Jeff Ward, chairman of the National Council of State Agricultural Finance Programs

Phone and e-mail interviews with Tom Fazzini, press secretary in the United States Department of Agriculture Office of Communications

E-mail interview with Hannah August, in the White House Office of Media Affairs

United States Department of Agriculture FY 2011 Budget Summary and FY 2012 Budget Summary

"Vilsack slams media for portrayal of farmers,” by Philip Brasher of The Des Moines Register, June 30, 2010

"USDA Announces Loan Program for Natural Resource Conservation,” USDA website, accessed Feb. 10, 2011

No tax incentives yet

Updated: Tuesday, January 12th, 2010 | By Catharine Richert

The agriculture industry is always trying to attract new, young talent, but it's difficult because farming is a very expensive endeavor. To lower the cost, President Barack Obama promised to provide tax incentives to make it easier for new farmers to afford their first farm.
 
More than a year later -- and an extensive Google and Nexis search later -- it seems there's been no progress on the issue.
 
In part, this may have something to do with the fact that Congress just finished up work on the massive 2008 Farm Bill, which sets the agenda for agricultural policy for five years. During the debate, there was a lot of discussion about new loans and tax credits for beginning farmers. Ultimately, farm-state lawmakers only focused on grants and loans for new growers.

Small farm advocates are still hoping Obama will pull through on the tax credit.

"Loans are important, but access to the money does not necessarily get you access to the land," Ferd Hoefner, director for the National Sustainable Agriculture Coalition, told the National Journal in September 2009. "Policy needs to work comprehensively and the tax incentive side is part of that equation."

On the second part of his promise -- to provide incentives to conduct sustainable agriculture and preserve land -- we've found some, albeit mixed, progress. Obama talked about "unprecedented levels of emphasis" on conservation of private lands. While the Interior and Agriculture Departments both got more funding for some land conservation programs, other initiatives were shortchanged in the Obama budget.
 
For example, he underfunded the Conservation Reserve Program, which encourages farmers to preserve more land, in his budget. Ultimately, Congress fully funded the operation.

So, there's been no movement on the tax credit, and Obama's record on land conservation has been mixed so far. As a result, we're moving this promise to Stalled -- at least for now.

Sources:

The National Sustainable Agriculture Coalition, Transition Team Recommendations: Support for Beginning Farmers and Ranchers, Dec. 23, 2008

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