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(PROGRESS) Family farmers worse off despite high prices

Family farmers worse off despite high prices
Farm Loophole Really Helps the Rich

Big farms garner almost all profit and tax breaks while black farmers keep losing land. We trim, blend, and append four 2011 articles from: (1) GDAE Policy Brief 11-01, March, on farm income by T. A. Wise; (2) Agriculture.com, Apr 12, on leases by J. Caldwell (Multimedia Editor for Successful Farming magazine); (3) The Nation, Apr 14, on a loophole by Y. Levine; and (4) BBC, Apr 14, on black land heirs by F. Strasser.

by Timothy Wise, by Jeff Caldwell, by Yasha Levine, and by Franz Strasser
Still Waiting for the Farm Boom

Since late 2006, crop prices in the US have risen dramatically, reversing a decades-long trend. Official reports point to records in net farm income. But are small-to-mid-scale family farmers -- those with gross sales between $100,000 and $250,000 per year farming an average of about 1,100 acres -- have seen a decline in net farm income.

Expenses have risen to gobble up higher sales revenues, and government payments have declined. With the recession, off-farm income has declined dramatically, leaving family farm households worse off than they were earlier when crop prices were low.

For 2009, these family farmers:

* saw average earnings from farming of just $19,274, including government payments, and

* relied on off-farm income to sustain the family, providing on average about $35,000; but this represented a decline of 24% from 2007.

The largest farms, those with sales over $500,000 per year, accounted for 73% of the net cash income to this sector. That figure rises to 88% if one includes the relatively small group of “non-family” farms, those that are incorporated or operate as other types of business. These are the clear winners from high crop prices.

JJS: While the very profitable farms soak up most farm income, the smaller landowners and tenant farmers squabble over the crumbs.

Talking a square land rent deal

Landlords and tenants are feeling uneasy in setting a rental rate. University of Nebraska Extension educator Allan Vyhnalek says, "Prices are moving more in 15 minutes, than they did over an entire year when I was growing up.”

As a general rule of thumb, the most accurate figure for rent is 25% to 30% of the land's gross income. But, when crop prices are falling, landowners may be reluctant to cut rental rates.

Vyhnalek says, "When landowners get used to having that income, they are not going to want to give that up."

JJS: So land rent is over a quarter of gross, but why does it go to a lone individual absentee owner who did not make the land instead of to the surrounding society who do make the land valuable? Anyway, while real farmers squabble, phony ones dodge taxes.

'Farms' Owned by the Rich Provide Massive Tax Shelter
All across the country, a huge number of America’s wealthiest are tapping into agricultural tax breaks -- and none of them have to do any real farming to qualify.

Billionaire publisher Steve Forbes got more than a 90% property tax reduction on hundreds of acres of his multimillion-dollar estate in upscale Bedminister New Jersey just by putting a couple of cows out to pasture.

Ag-exemption is such a money-saver that it’s hard to find rich landowners in Texas – levying one of the highest property tax rates in the nation -- who aren’t moonlighting as farmers, and that includes George W. Bush. The loophole accounts in part for the state’s $25 billion budget shortfall.

To keep land in agriculture, states began granting exemptions that allowed farmland to be assessed at rates below market value, frequently by 90% or more. So-called use-value assessment is today used by all but one of the fifty statesd.

In a few Wisconsin counties, half the land receiving agricultural tax breaks was owned by real estate developers. The report included photographs of these subsidized “farms” being advertised as future shopping centers and tract home developments.

California’s Monterey County loses about $1 billion a year due to a farm tax reduction program, in which 30% of all private land in the state is enrolled.

To recoup revenue lost to tax breaks for phony farms, counties have raised taxes on sales and non-agricultural property. In southern Pennsylvania, the tax shift from agricultural exemptions increased taxes on non-agricultural properties by 27%.

Pay more; get less. State legislators slash social spending rather than close this loophole benefiting billionaires.

To see the whole article, click here .

JJS: While one minority gets more land and privilege, another gets less.

Cherished land lost in the South

Following the US Civil War, many slaves who gained their freedom acquired land which their family had worked for generations. In the peak year of 1910, African Americans owned 15 million acres of farmland in the US. By 1997, that number had dropped to 2.4 million acres, and is less than 2 million today.

For generations, poor minority landowners died without a will and passed the land down to an increasing number of heirs to create what is commonly called "heirs' property". Some of the heirs hold only a tiny interest in the land, might live far away from it, or do not even know about their ownership in the first place.

Over the decades, the former swamplands turned into prime waterfront real estate on the Southern coast, ideal for golf courses and gated communities.

Developers need only buy the interest of one individual to force a partition sale of the entire property. The fractured and rarely wealthy group of original heirs often does not stand a chance to hold on to their land.

Jenny Stevens, executive director of the Center for Heirs Property Preservation, said, "The greater challenge is policy. If you change the laws heirs property is not an issue, but it's real estate and affects other forms of ownership. It's a larger group who doesn't want to get anything done."

To see the whole article, click here

JJS: All these problems have the same solution -- put into practice the ethic that the value of land belongs to all members of society equally.

Owners of rural land, which has lower value, won’t pay nearly as much land dues as owners of urban land, which has steeply higher value. In the countryside, in many ways it’s cheaper to live than in cities. So country folk get can stretch the share of regional land values further than their city siblings.

Also, the land dues make it unprofitable to amass vast holdings as an absentee owner. As they unload their excess land, at affordable prices, real farmers no longer have to lease, they can buy the land they farms.

As owner-operators, they can decide what to grow and how to grow it. They can forgo chemicals and raise organic crops for local markets. They can claim a bigger share of agricultural income and eliminate the excuses for subsidies.

Finally, land dues exert their greatest impact where land is most expensive, which is in cities. Owners of those spendy locations, in order to pay their land dues, would quit speculating, wasting land, letting vacant lots lie fallow. Instead they’d put central sites to highest and best use.

Drawing development into downtown leaves little leftover to spill over onto the urban fringe. Bye-bye, excuses for loopholes.

Land dues and the rest of the geonomic program might at first seem like an unaffordable burden upon working farmers but it actually is the reform they need. And when farms are wholesome, so is food, thus so are food eaters. So all food eaters should become geonomic advocates.

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Editor Jeffery J. Smith runs the Forum on Geonomics.

Labels: AGRICULTURE, FARMERS, FOOD INC, NEOLIBERALISM

posted by MrK @ 11:07 PM