Twenty-three Farm Bureau members representing Iowa Farm Bureau’s Ag Leaders Institute visited Washington, D.C. on Sept. 11-14 to share concerns with all four of Iowa’s U.S. congressmen, Senator Charles Grassley, Senator Joni Ernst, trade officials and representatives of the U.S. Department of Agriculture. They discussed issues pertinent to Iowa farmers, including trade, but many topics centered around challenges for beginning farmers.
With 89 percent of crop land in the U.S. covered by the federal crop insurance program, Clark Dolch of Adair County, who also works as an agricultural loan officer, stressed its importance in the 2018 Farm Bill for lenders and producers. “Crop insurance is the main risk mitigation tool for young farmers and is vital for continued success in the industry,” said Dolch. “Telling my story to Congressman Young helps him have a real-world story as he is negotiating with those who do not understand the challenges we face in rural America.”
In farming, land is one of the most expensive starting costs with the majority of the loan payment being interest. Not allowing for interest expense deduction will increase the effective tax rates, says Quentin Stortenbecker of Hancock County. As the Trump administration begins work on tax reform, Stortenbecker relayed to lawmakers that production agriculture is a “capital-intensive industry that requires debt financing” and farmers will be “unable to restructure their balance sheets as their main capital funding source are traditional banks.”
Another piece of tax reform critical to the next generation of farmers wanting to carry out their family farm’s legacy is estate taxes. “We need stepped-up basis to pass along land,” said Joel Wahling, a 4thgeneration farmer in Shelby County.
Through a “step-up in basis”, a family member who inherits the farm would not have to pay the capital gain tax accrued from the initial land purchase price to the land’s valuation at death. Instead, the valuation at death becomes the new basis, eliminating the burden on family members. “For our family’s farm, our land has transitioned through generations, and some of that land has an original purchase price as a basis. If they change the estate tax and repeal stepped-up basis that land would not be able to be re-evaluated at the time of a person’s passing which would result in a tax penalty. The elimination of this would not be good at all,” Whaling said.
When it comes to farming ground through a cash rent agreement, farmers feel that they are competing with the government for use of highly productive land, says Beth Rachut of Mitchell County. In Rachut’s area, the average cash rent per Iowa State University is $215 an acre, but she has known farmers who have lost land because their landlords are being offered $300 per acre to enroll in the Conservation Reserve Program (CRP). She and other farmers urged lawmakers to make sure CRP payments more closely mirror cash rent in the county.
“It’s important to put conservation on the ground,” Rachut said. “But CRP is meant for sensitive areas. That’s what should be enrolled in it. As a relatively young farmer, at $300 an acre, we just can’t compete with that.”
Since its inception in 1998, the Ag Leaders Institute has prepared nearly 450 agricultural leaders in Iowa. It is a year-long program offered to Farm Bureau members who have been nominated by their county, applied and have been selected as one of 25 members to participate in the Institute which works to develop individual leadership skills and provide cutting-edge information about agricultural issues. The Institute culminates with a trip to Washington, D.C., and graduation at the Iowa Farm Bureau annual meeting on Dec. 5-6 in Des Moines.
Those participating on the trip from eastern Iowa include Alex Beck of Delmar, Rose Danaher of Amana and Matt Werner of Mount Auburn.