- Assisting a New Farmer
- Ecosystem Services
- Agricultural and Conservation Easements
Assisting a New Farmer
Helping a beginning farmer can improve sustainability in a number of ways. It can be used to pass the art of farming to a new generation, help revitalize the rural social structure and economy, provide a more flexible tenant willing to provide customized stewardship for the land, and produce economic returns through diverse markets and government programs.
How to Assist New Farmers
Find a New Farmer and Start a Conversation
First, you can actively seek out a beginning farmer as a tenant. This could be a neighbor’s child or someone else you know looking for land. Or, you can use one of the many networks available to find a new farmer looking for land. A few such organizations include the Beginning Farmer Center at Iowa State University, The Land Stewardship Project’s Farm Beginnings, or Practical Farmers of Iowa. To find a farmlink near you check the National Farm Transition Network.
There are also many tools that can be used in a lease arrangement to assist a new farmer. One of biggest dilemmas facing a new farmer is gaining the capital to start farming. Leasing can provide a way to gain access to land, learn valuable lessons about running a farming operation, and perhaps even save the needed capital to become a landowner.
Providing secure tenure is a key consideration for promoting sustainability in any farm lease arrangement. However, when leasing to a new farmer, this element takes on additional importance. Unlike an established farmer that may own land as well as rent from other landowners, a new farmer may be dependent on access to your leased farmland. Therefore, secure tenure is crucial to their ability to access capital and purchase needed equipment and supplies.
Under certain circumstances you might also consider providing an option to purchase or right of first refusal in the lease agreement. This can provide an additional layer of tenure security. If you do decide to address these issues it is especially important to include an accurate legal description of the property in lease agreement.
Reducing the rent, at least initially, is an obvious way to help a new farmer that lacks capital. A graduated rent begins with a first year reduction in the rent that is gradually eliminated. For instance, the rent might be reduced by twenty percent the first year, then fifteen percent the second year, and so forth until your tenant is paying the full rent in the fifth year.
Share Expenses and Equipment
Other cost-sharing tools can also provide valuable help to a new farmer. This can take the form of sharing some of the expenses related to production or perhaps sharing equipment you might own. As discussed in Chapter Four of “The Landowner’s Guide,” sharing in expenses, particularly in a crop-share arrangement, may have additional tax and social security repercussions.
Mentoring a New Farmer
If you are a farmer yourself or retired from farming you might also consider mentoring a new farm tenant. This provides access to land as well as a wealth of valuable information. If you do take part in the management of the farm you will want to be certain to establish your intent to enter a landlord-tenant relationship rather than a partnership or some other legal relationship. Again, you will want to also pay attention, particularly in a crop-share arrangement, to tax and social security issues.
Consider Leasing a Small Portion of Your Farm
Some new farmers may be looking to only rent a few acres to establish a small diversified operation. This can allow you to assist a new farmer while renting the remainder of your land to another farmer. This situation benefits new farmers, the land, the local economy, and diversifies your farm income.
Interviews with new farmers, aspiring farmers, Secretary of Agriculture Tom Vilsack, and other experts help shed light on how leasing to a new small farmer can benefit beginning farmers, landowners, and the land.
There can also be additional financial benefits for you. Many states offer tax incentives for landowners that rent to beginning farmers. The Iowa Beginning Farmer Tax Credit Program is one such opportunity. For more information on benefits and eligibility for this program review the Beginning Farm Tax Credit Summary.
There is also a federal program for retiring landowners with CRP land. The Transition Incentives Program (TIP)allows retiring farmers to receive two years of additional CRP payments for renting or selling farmland to a beginning or socially disadvantaged farmer for a term of five years or more. The landowner must allow the tenant to adopt sustainable practices, including but not limited to organic production. The FSA is also developing a website called TIP NET that will assist connecting eligible landowners and tenants. At the time of writing this site was not yet online.
More information about new farmer initiatives can be found at the Drake Agricultural Law Center’s Beginning Farmer page.
There are a variety of opportunities in relation to recreational uses, such as hunting and fishing, on agricultural land. The land can be enjoyed for personal use by you as the landowner, the tenant, or both. You or the tenant can also rent the land to third parties for recreational uses. Opening the land to the public can provide financial benefits under certain state programs and it also improves the quality of life for the surrounding community. Opportunities that allow your tenant to use or to make money from allowing others to use the land for recreation increases their motivation to maintain and restore wildlife habitat. Like many other issues, these opportunities present additional considerations when dealing with leased farmland.
The Right to Recreate on Leased Land
As discussed in the section on the tenant’s right to possession, the parties should provide a written provision addressing the rights of the parties in relation to recreation opportunities. Courts have held that an agricultural lease does grant the tenant the right to use the property for hunting and fishing, as well as to lease the property to others for such purposes. Therefore, if you wish to reserve any recreational rights for yourself or to limit your tenant’s rights in this regard you should specifically state the limitations in the lease.
Liability on Leased Land
Liability is also an important consideration. If the tenant retains the right to lease the property for hunting or fishing you will want to ensure the tenant is willing to indemnify you against any claims by third parties. This, of course, should also be considered if you are the one leasing the premises for third party activities. Consideration should also be given to requiring insurance to be carried by the party responsible for permitting others to use the property. It is worth noting that some state public access laws relieve landowners and tenants of some liability in relation to public access on the property. State laws should be checked for the extent of liability relief and limitations. For instance, some state laws only cover land for which no charge is required to gain access. The National Agricultural Law Center provides a database of state recreational use statutes.
Preventing Interference with Agricultural Uses
If you’re interested in reserving the right to lease the land yourself, you should consider including provisions that protect your tenant’s agricultural interests in the land. Such provisions might include ensuring that hunting activities will not take place during certain farm operations or requiring that advance notice will be given before anyone enters the property for recreational purposes.
Land Use Regulations
Attention should also be given to zoning requirements and other land use regulations if the recreational use involves agritourism. Many states have adopted right to farm laws that exempt agriculture from zoning requirements. However, recreational activities can undermine a determination of a business as an agricultural endeavor, thus subjecting the enterprise to certain land use requirements.
Ecosystem Services refers to a market based approach to providing environmental benefits. Voluntary markets have been established for improving water quality and biodiversity. There have also been recent efforts to establish markets for carbon sequestration. Basically, you can get paid to provide environmental benefits that offset harmful practices elsewhere. It should be noted that these services are in the early stages of development and agriculture’s role in this new marketplace is yet to be determined.
These markets can provide a unique way to improve the sustainability of the property while benefiting financially. However, in relation to leased farmland there are some important matters to consider.
First, it is important to address who has the authority to participate in ecosystem markets. Many of the contracts for ecosystem services require specific land uses and practices for many years. Therefore, it is important that the tenant understands they cannot enter a contract that places certain restrictions on the property beyond the duration of the lease agreement without your participation. However, you may wish to encourage the tenant to seek out such opportunities. To do this you could give your tenant the ability to enter any such contracts after they provide you notice and the opportunity to decline. This may require a provision stating that you will sign required documents to establish ecoservice payments.
Second, it is important that both parties understand their rights and duties in relation to the new ecosystem contract. Many of the contracts require pulling land out of agricultural production, creating wildlife habitat, or specific farming practices such as using no-till farming. It is important to understand who will provide additional labor and pay for the expenses incurred.
Finally, you will also want to address the division of payments for the ecosystem services. Consideration should be given to the contributions of each party, as well as, perhaps, benefits that you will receive beyond the term of the lease.
It is also worth noting here that you can enter ecosystem services contracts and receive payments for land already entered into some government conservation programs, such as the WRP. You should make sure that any ecosystem services contract requirements do not violate the terms of the easement contract.
Agricultural and Conservation Easements
What is a Conservation Easement?
Agricultural and Conservation Easements are a permanent way you can protect the natural resources, scenic value, and agricultural use of your property. Agricultural easements typically protect land from development and other non-agricultural uses while ensuring the land is farmed in a sustainable manner. Conservation easements may or may not allow agricultural uses on the land, depending on your preferences and the characteristics of the property. Such easements are typically used to protect important natural features and wildlife habitat.
Professor Neil Hamilton interviews Mark Ackelson, President of the Iowa Natural Heritage Foundation, on the legacy of Iowa’s land and the use of conservation easements as a tool to protect that legacy.
Benefits of an Easement
Easements are a great way to ensure the land is used in a manner consistent with your values while retaining ownership of the property. There, however, many legal and tax consequences to consider when entering a conservation easement. For instance, donating a conservation easement can allow for a charitable deduction on tax returns. In addition, because an easement typically lowers the fair market value of the land there may be tax benefits to entering an easement prior to a sale, gift, or bequest of the land. A bequest of a conservation easement can also reduce the taxes on your estate. There are also tax credits that are available for conservation easements in many states, including Iowa.
There are other methods that can be used to protect the natural resources of your land, such as bargain sales and donations with a reserved life estate. All of the options should be discussed with the organization that will receive the conservation easement. These organizations include government entities, such as county conservation boards or state and federal agencies, and non-profit organizations that specialize in conservation.
- INHF is a non-profit organization specializing in conservation on private land through conservation easements and, in some cases, ownership. The Foundation also provides extensive information on private lands conservation through the “Landowner’s Options” booklet, available online or in paper format.
- The Land Trust Alliance is an umbrella organization comprised of land trusts across the country. The Alliance offers of a list of land trusts organized by state.
- There are several conservation easement programs that exist on the federal level. Many of these are administered by NRCS. Easement options include:
Farmland Leasing and Conservation Easements
Provided that agricultural uses are not prohibited by the easement agreement, your land can still be rented for farm production. However, it is important to ensure your tenant is aware of the restrictions in place. An effective way to do this is to reference the easement in the lease agreement and ensure your tenant receives a copy, at least of the allowed and restricted uses.
If you are thinking of using a conservation easement in the future, the present leasing arrangement can also impact your ability to enter the arrangement. The organization receiving the easement will likely want your tenant to relinquish some of their rights to use and possess the property. This is especially important if you’re engaged in a long-term lease.
However, this should not discourage you from entering a long-term lease. Rather, you might simply need to do a little extra planning and negotiating at the outset of the agreement. For instance, you can make sure your tenant understands your intentions and that there is agreement on the possibility of a conservation easement in the future. Provisions can be used to address the tenant’s right to learn of any easement offers and voice concerns. Early termination provisions can also be used to protect the tenant’s investment if an easement precludes further farm production.