Access to Land

By Kathy Ruhf, New England Small Farm Institute and Growing New Farmers

This article is in remembrance of Chuck Matthei, a visionary and pioneer in the area of equitable access to land. Chuck was the founder of Equity Trust (CT), an organization devoted to alternative and affordable tenure for farmers and other seekers of land and housing. Chuck passed away in October, 2002.

"I want to start farming. How can I find a farm?"
"I just bought some farmland. How do I start farming it?"
"I can't afford to purchase a farm. How can I get onto farmland?"

Are any of these questions familiar to you? If yes, you are asking some of the most important and challenging questions facing new farmers today—how to find, evaluate and get onto the right piece of farmland. Especially in some parts of the Northeast, where competition for and cost of land is high, accessing farmland may be the toughest obstacle for a beginning farmer.

The "farmland question" addresses:
  1)  locating land,
  2)  assessing it for suitability against your farming goals,
  3)  choosing the right tenure model,
  4)  negotiating the transfer, and
  5)  securing any necessary financing

Tenure means "to hold". There are different ways to "hold" land. How a new farmer feels about his or her relationship to farmland will guide decision-making about tenure. Many farmers have a deep, value-based commitment to owning a farm. They view farmland as a legacy. For them, stewardship and ownership are inextricably linked. Others feel that stewardship values can be realized on land they don't own. For many new farmers, owning the land is not as important as long-term security. Some are guided by personal values that question private ownership of land as a commodity. They welcome tenure arrangements that address issues such as speculative gain. Others feel that it's better not to invest capital into land, but rather into growing the business. They realize that for their enterprise, they cannot carry the costs of owning the land. As several economists have pointed out, farmland often cannot pay for itself by farming it. Still other farmers hope eventually to own their own farms, but value the option for shorter-term tenure agreements as a first step. So choice of tenure is both a very personal as well as business decision.

What are the elements of tenure? You need access to the land. You need security. You need to be able to redeem your investment in the property. You need clear articulation of rights and responsibilities. Some people argue that settling these factors is more important than who holds title.

Often tenure decisions change over the course of a new farmer's development. In the start-up phase, it may make sense to begin farming with a short-term rental arrangement. Short-term rental (say, 1-5 years) offers the advantage of flexibility and lower land costs. If you decide to change your enterprise, or your location, it's easier to move on. On the other hand, short-term rental can discourage investment in improvements that have a longer-term return such as some soil amendments, fencing or a structure.

For some farmers, a longer-term lease agreement offers real advantages, and can be an excellent choice for the farmland owner as well. Long-term leases (5 to 30 years or more) offer the opportunity for security (and therefore a longer planning horizon, which fosters stewardship practices such as rotations or slower-release soil amendments) ownership of improvements, and morgageability. A variation on leasing is lease-to-own, where a young farmer starts out leasing, but the tenure arrangement provides an agreement (or an option) to purchase the property after a certain amount of time.

For example, Nan has negotiated a 10-year lease with a private landowner. She has the right to use the land, well water and small barn for her farm business in exchange for an annual fee. They have divided the responsibilities for repairs, property taxes and other land costs. Nan is permitted to build a farmstand on the property. The landowner agreed to purchase the residual value of the building if and when Nan leaves the property. She has first option to renew the lease, and to purchase the property if the landowner decides to sell. Of course, there are many details included in this type of agreement, but the bottom line is that both parties are satisfied.

When farm ownership is transferred, the process is complex, too. There are interpersonal, legal, and financial considerations. Today, fewer farm properties are being transferred within the farm family. Intra-family succession to the next generation in the farm family can be extremely complicated. Often, there are delicate issues around the estate planning and retirement needs of the exiting generation and treatment of non-farming heirs. One of the trickiest issues is the transfer of decision-making between the generations. One famous story involves the exiting farmer not being "ready" to pass along management to his son. The farmer was 96 years old; the son was 72.

Sometimes, there is no heir to take over the family farm business. If the family is committed to seeing the farm business continue and the farmland stay in farming, they need to locate a farmer outside the family. In transfers between unrelated parties, the issues are no less complicated. The transfer must consider the family, legal and financial implications of transfer of the farm business assets and management.

For some new farmers, entering into a transitional arrangement with an "exiting" farmer offers considerable advantages. First, there is the opportunity for mentoring. Working alongside an experienced farmer who is a willing teacher is a true gift. Gradual transfers of the farm business can also make business sense to both parties. The new farmer can start as an employee, with specified tasks. She or he can save money while working into an equity position, as a partner, for example. The exiting farmer can sell or gift farm business assets while transferring management responsibility. This arrangement enables the eventual transfer of ownership of the farm while sparing the sudden and often unmanageable impact of capital gains or estate taxes for the exiting farmer or his heirs. It enables the new farmer to build equity and experience.

Sometimes, a new farmer can find secure tenure on land that is not currently being farmed, or that is owned by non-farming landowners such as private families, municipalities or land trusts. Often, these opportunities provide wonderful "win-win" situations for both parties. Landowners can meet their goals to have the land in active use, and farmers can negotiate secure tenure through a variety of arrangements. More and more non-farming landowners are interested in organic and sustainable farmers to meet stewardship interests such as wildlife habitat enhancement or water supply protection.

For example, Joe negotiated a long-term lease for farm property owned by a local land trust. The terms of the lease required that the land be farmed according to organic certification standards. The land trust arranged and paid for technical assistance to help Joe develop his business plan.

How can you find land? Unless you are a next-generation farmer poised to take on the family farm, you need to find the land that meets your personal and farm business needs. Thinking through some of these complicated issues around tenure is an important first step. Then what? There are programs and strategies to help you find the right farm.

Over ten years ago, the Center for Rural Affairs in Nebraska recognized that more and more retiring farmers did not have heirs to take over the farm. At the same time, there were more and more young farmers from non-farm backgrounds who wanted to find farmland, or young farmers who were not interested in or able to take over the family farm. The Center founded the first land linking program. Its purpose was to match farm seekers with farm owners, and to facilitate the farm transfer.

Since then, land linking programs have sprung up across the country. Today, the Northeast boasts more linking programs than any other region. New England Land Link, a program of the New England Small Farm Institute, was first in the region, and covered the six New England states. Since that time, state-specific program emerged in Vermont (Land Link Vermont) and Maine (Maine Land Link). Programs in New York (FarmNet/FarmLink at Cornell University), Pennsylvania (PA Farm Link) were established in the early 1990's. Newer programs have been launched in Maryland and New Jersey.

All land link programs have in common the linking component. However, soon after these programs were established, their sponsors realized that linking was necessary but not sufficient to assure successful access and transfer. A lot of technical assistance, "hand-holding", education, information and referral were required beyond the simple exchange of contact information about available properties. These days, linking programs provide a wide array of programs and services, from estate and retirement planning workshops to publications on alternative tenure, to individual farm succession consultations, to expert facilitation and mediation, to trainings for professional service providers.

Training service providers is really important. There are very few estate planners, attorneys, accountants, extension educators, etc., with expertise in farm succession and acquisition. Even these advisors are not necessarily familiar with some of the more innovative approaches that are increasingly popular with farmland owners and seekers alike, such as the use of conservation easements,

Another challenge is finding and educating farmland owners. In linking programs, the ratio of lookers to owners can be as high as 7:1. It's been shown that farm owners, especially those in the generation ready to retire, are reluctant to think about succession planning. Many do not have wills. Most do not have a succession plan, and fewer still have identified a successor. Too often, adequate planning does not happen, and heirs are forced to sell the farm -- often to development -- to pay estate taxes, and to abandon the farm business. So, to help new farmers get onto farms often means helping exiting farmers prepare to pass the land along to a new farmer.

In the Northeast, there are many "non-traditional" partners that can play an important role in getting new farmers onto farmland. These partners participate in creating tenure "packages" that can make secure and affordable tenure a real option for new farmers.

For example, some land trusts are very interested in "working landscapes" and are active in obtaining easements -- meaning a restriction prohibiting the land from being developed -- on agricultural land. They want farmland protected, and sometimes have specific stewardship goals. The Vermont Land Trust is a leader in this area. A few land trusts own land and offer secure lease agreements. More often, they own an easement. The easement makes the land more affordable because it removes the development value. The land trust can be an important partner in negotiating tenure terms that allow "sustainable" farming practices.

Publicly held open space -- properties acquired or protected by municipalities or states can be a source of land for new farmers. The new farmer will never own the land, but innovative long-term agreements can benefit both parties. Shareholders in community supported agriculture (CSA) farmers can be among the most powerful partners in a farmer's search for secure tenure. In some cases, shareholders raise money to buy the land, or to contribute to a fund that enables the farmer to purchase the land. Other community interests such as recreational clubs or schools may be willing to invest in preserving a piece of property for farming if they also derive direct benefit from the arrangement. They may contribute in exchange for the right to use riding or snow mobile trails. Equity Trust, an organization in Voluntown, CT, is a pioneer and leader in promoting and packaging these types of arrangements.

Where to look for a farm? Besides checking in with land linking organizations, a new farmer could work with a realtor. New farmers report, however, that many realtors are not interested in farm properties. Linking programs mention that farm publications, state department of agriculture and extension newsletters sometimes have classified sections with farms listed. Look on bulletin boards of farm suppliers and dealers. Attend farm organization meetings and conferences. Ask around; get plugged into the network. Sometimes a new farmer will say, "there's a farm in my town with an elderly farmer (or non-farming widow). Can I knock on the door?" If you do you homework and are very thoughtful and diplomatic in your approach, it might work!

The most common complaint from farm owners who are approached by a "transferee" is that the new farmer is "starry-eyed" and does not have his or her ducks lined up. Why would he entrust his beloved farm and farm business to someone who doesn't have a clue? So, it's important to be knowledgeable, professional, and prepared. And, be realistic about your level of experience. You may be better off to learn about farm management as a farm employee or assistant manager before you take on your own farm business.

What to look for in a farm property? There are so many considerations in looking for land that it can feel daunting. Sometimes it helps to divide the variables into three categories: necessary, desirable, and optional.

For some new farmers, it is necessary to live in a certain area, for example if a partner has a job there. For others, a necessary feature might be high quality soils for specialty crops, or a visible location for a retail outlet, if these business choices are firm. It might be desirable (but not necessary) to find a property with a barn in good condition. It might be desirable to have existing well water, but possible to dig your own well. It might be necessary to have a house on the property, or it might be an option to live nearby.

Regarding location, consider access, both by you, the farmer, and your customers, if you want them to come to the farm. Consider neighbors, visibility and the general community environment; is it friendly to farming? Are there other farms in the area? Does it matter? Where are the nearest suppliers and repair services? How far to the markets you choose to pursue?

You can get a good sense of a farm property by eye-balling it, but that's not enough. Consult a soils map and ask for or obtain soil tests. Consider the ways in which microclimates, wetlands and other sensitive features may contribute to the overall health of the farm or constrain it. What is the lay-out of the farm and any structures? Is it workable or adaptable to your business interests? Where are the boundaries? What size and shape are the fields? In what condition are the buildings, fencing, culverts, woodlands?

What about housing? Some land link seekers fantasize about their ideal house in their farm search: "3 bedrooms, southern exposure, energy-efficient, hardwood floors", etc. etc. Others are satisfied with the prospect of living in a mobile home, above the barn, or down the street in rented rooms.

It is very important to inquire about the history of the farm. What were the past uses? Where are any underground storage tanks? Where were chemicals stored and used? Were there any non-farm uses of the property? Are there any liens or other encumbrances? Of course, the questions you ask will depend somewhat on the tenure model you select. If you plan to rent some acreage, many of these questions are not as critical as if you are planning to purchase a functioning farm with farmstead.