Tag Archives: Farm

What’s Risk Got to Do with It?: Encouraging On-Farm Conservation

Like any business owner or operator, farmers take careful consideration when making any changes to their operations. A change that may seem relatively simple to an outsider could require new equipment, more labor or a different response to heavy rain or drought. In the end the change may turn out to be a great success, but that is often difficult to be sure of at the outset.

Pennsylvania farm with pond.This balance of change, risk and opportunity cannot be overlooked when asking farmers to address environmental challenges in the Chesapeake Bay. Agriculture may be the leading source of nutrient run-off there, but it has also been the second largest contributor to the progress in cleaning up the bay. We have been working with farmers in the region to help advance this progress through our BMP Challenge, a risk management program that American Farmland Trust is implementing across the nation to encourage farmers to make conservation happen on-the-ground. (For more on the BMP Challenge, read my recent story about visiting a farm in Virginia.)

A recent study in Pennsylvania focused on how to address risk when the business of agriculture intersects with the need to improve water quality in the Chesapeake Bay. . Here is what we found:

Risk Is Real

The National Academy of Sciences acknowledges the dilemma that farmers face in deciding how much fertilizer to use:

“Since (they) must make nitrogen applications without being able to predict weather and crop yields, the potential for being wrong is always present and will always occur in some years.”

Our data shows that reducing fertilizer on crops can result in decreased yields 40 percent of the time even with well-tested practices. Over time, these practices should pay off, but farmers cite fear of lost income as a major consideration when deciding whether or not to implement new conservation practices.

An Effective Way to Manage Risk

The BMP Challenge provides three helpful supports to farmers willing to take a chance:

1) Technical assistance from a certified agricultural consultant to help plan and implement the change

2) A comparison of the standard and the new practice on the farmer’s field so he or she can get experience using it and see the results

3) An income guarantee so that if a loss in profit is experienced, the farmer receives the difference

The Result: Widespread Adoption of New Practices

In Pennsylvania, we found that BMP Challenge participants report high satisfaction with the program, and 85 percent say that they have continued to use the practice or a modified form of it on their farm.

Looking Ahead

These results are an important step in addressing the risk that farmers face when adopting conservation practices. We believe that the BMP Challenge is an important new tool for farmers—helping them manage part of the risk they face in trying to be good stewards of the environment and successful small businesses at the same time.

Over the coming months, we will continue exploring how these results will impact the Chesapeake Bay and impaired water bodies across the country. Can we scale up our demonstrations to broader availability? Are there other ways to address “conservation risk,” such as emerging income opportunities like water quality trading that can help mitigate the financial risk of adopting water quality practices?

Jim Baird About the Author: Jim Baird is Mid-Atlantic Director for the American Farmland Trust where he works to help maintain viable farms and clean water through the adoption of nutrient-related conservation practices and en

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Tax Package Will Promote the Protection of Working Farms and Ranches

American Farmland Trust and other national conservation organizations heralded the recent signing by President Obama of the omnibus tax package and its provision to extend the enhanced conservation easement tax deduction for the 2010 and 2011 tax years. Originally included in the 2006 Pension Protection Act, the enhanced conservation easement tax deduction allows qualified farmers and ranchers* to deduct the value of a conservation easement contribution up to 100 percent of their Adjusted Gross Income (AGI) and expands the period landowners may carry-forward any unused value of a deduction up to 16 years. The legislation greatly increases the potential use of this option to protect our nation’s working agricultural lands.

Conservation easements have been used voluntarily by landowners to protect agricultural lands from development and fragmentation for close to 30 years. The donation or sale of conservation easements has enabled farm families to protect their land for future generations while receiving tax benefits or cash based on the land’s full market value. The donation of conservation easements by landowners has been influenced by IRS rules. However, until the 2006 Pension Protection Act established the enhanced conservation easement tax deduction, these rules provided minimal incentives for farmers and ranchers with a large percentage of their equity tied up in their land. The former IRS rules limited the carry-forward period over which a donor could claim a deduction to six years and capped the annual deduction at 30 percent of AGI.

A simple example can illustrate the power of the new rules in enticing full-time farm and ranch families to consider donating a conservation easement on their productive agricultural land or accepting less than the full purchase price when selling a conservation easement to a publicly funded Purchase of Agricultural Conservation Easement (PACE) program. Consider that a conservation easement donation valued at $450,000 and made in 2010 or 2011 by a qualified farmer with an annual AGI of $50,000 will yield the full value of the donation in federal income tax deductions in nine years (the value of the gift up to 100 percent of AGI each year for 16 years or until the gift value is used up: $50,000 X 9 = $450,000). Under the old rules, that same gift would have yielded only $90,000 in federal income tax deductions to the farmer (the value of the gift up to 30 percent of AGI each year for six years or until the gift value is used up: $15,000 X 6 = $90,000).

By creating an opportunity to deduct a large percentage, if not the full amount, of the value of a donated conservation easement, the expanded federal conservation tax deduction provides farmers and ranchers with a powerful business and estate planning tool. This new tax treatment also makes the bargain sale of a conservation easement in a PACE transaction worthy of much more serious consideration by agricultural land owners.

By increasing the likelihood that landowners will donate or accept a discounted price for conservation easements, the federal tax incentive provides tremendous leverage for public farm and ranch land protection funding, stretching those dollars at a time when budgets at all levels of government are stressed to the limit.

* Qualified farmers and ranchers are those who earn more than 50 percent of their gross income from the business of farming in the taxable year in which the conservation easement is donated. Land subject to the conservation easement must be available for agriculture.

About the author: One of the nation’s leading experts in Farmland Protection, Bob Wagner celebrated his 25th year at American Farmland Trust in 2010 and has worked in the field of farmland protection since 1981. In his current position, Wagner helps states and local communities nationwide build support for and create policies to protect agricultural land.

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New York State Food Policy Council Considers Farmland Protection

In New York State a farm is lost to development every three days.  This startling reality has helped make the Empire State home to three of the Top Twenty Most Threatened Farming Regions in America. Together with our partners, we have made great strides in reducing the acres of farmland lost but much more work needs to be done.

Click to see full graph

Earlier this week I had the opportunity to discuss our need to protect farmland from poorly planned development and other farm and food issues as part of a panel presentation at the summer meeting of the New York State Council on Food Policy held in Harlem.  The Council on Food Policy makes policy recommendations to the Governor that ensure both the availability of fresh, nutritious and affordable food for all New Yorkers and a strong farm and food economy for New York State.

The Council’s recent meeting on the “New York Food System: Supply, Demand and Delivery,” was one of the first times the Council heard directly about the critical importance of farmland protection to the long-term security of the state’s food supply. More than 70 percent of the fruits, vegetables and dairy products produced in the country are grown in metro areas and are at risk of being lost to unplanned development.  A focus on preserving our working lands during food policy discussions is critical as agriculture lies at the heart of a viable food system (No Farms No Food, remember?).

Our presence at the Council on Food Policy meeting is just one example of the many ways in which we are working to integrate farmland protection into New York’s food and nutrition policies. Interest in making locally produced foods available to all, improving nutrition and fighting childhood obesity has never been greater. Through advocacy efforts, such as our No Farms No Food Rally held this spring at New York’s Capitol in Albany, we are working to engage new partners and stakeholders who are concerned about food issues in the fight to protect America’s farmland.

The need for farmland protection in New York State continues to accelerate beyond the funding available. Getting the facts out about food, farming and farmland to our state government is vital  to ensuring that the precious dollars available remain committed to protecting our farmland and, in turn, securing a healthy and accessible food system.

About the Author: David Haight is New York Director of American Farmland Trust. To see more posts by David, click here.

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