A central threat to the health of American agriculture is the increasing age of farm operators. The average age of farmers nationally is approaching 60 and it is higher in high land value areas like our Hudson Valley. Modern agriculture is highly productive, technical and capital intensive. Production techniques are complex, crop specific, and vary by region. Effective management is imperative in this low margin industry and is usually the result of a gradual accumulation of experience and working capital. Tenure figures importantly in management. Many of the tools used in effective production are structural and tied to the landscape. For young farmers to be able to build capacity and take up production as older farmers leave, secure tenure is a necessity. High land costs are an impediment to young farmers starting out when the need for working capital is greatest. Many begin by renting while developing tools, production and markets with the hope of buying land later. Some lease most of their production ground and buy a small piece of land to locate permanent infrastructure. Some work with land preservation groups to get access. Securing tenure remains a challenge though, and land costs drive decision making for most small farms. Why is it that new and young farmers have such a hard time affording the land they need? The answer has to do with how we decide as a society to structure our relationships to each other and the rest of nature, and solutions depend on examining some fundamental beliefs.
We can begin to see some of the signs of the root causes of lack of young farmer tenure when we look at agricultural land ownership in my neighborhood, Columbia County, New York. Agricultural land in large units sells in my area from between five and ten thousand dollars per acre. That is a similar price to black dirt in Iowa. But land in Columbia County won’t produce 240 bushels of corn per acre like Iowa soils. Columbia County land derives its value partly from its capability (natural potentials to meet human needs like agricultural productivity, timber, coal or water power) and partially from its location, how much people want to be there.
Most of the farm land in my community is not owned by farmers. All of the most productive land in my community is farmed but almost all of it is rented. There are certainly a few farmers operating on large commercial scale who own land, but even they are forced to rent. Outside of deals involving a land trust contributing funds to help a farmer pay for land’s location value, very few farmers are capable of buying land from the production that occurs there.
So who owns the land? Largely it is held by well to do people who don’t farm. They rent the land to farmers, so it remains in agriculture, but any individual farmer may not have secure tenure to any particular piece of land. That is more of a challenge to young farmers who are not as established and as resilient as they will be later. Young farmers express the desire to own the land they work or at least to secure tenure on the land they work. The will is there, why not the way? The challenge comes from how we decide to share nature and pay for our collective needs.
Looking at the situation in Columbia County, we find much farmland held as vacation spots or second homes for part time residents, and a look at our tax structure can tell us why. Public works in our part of the world are funded by state and local taxes, often with a federal contribution. These taxes, outside of local property taxes are almost entirely taxes on labor- income and transaction taxes. Even local property taxes are mostly taxes on labor. Site value or location value is normally a small portion of a property tax bill, while taxes on improvements are high. We tax labor for the resources we apply to collective needs like security, transportation and education. These social improvements have the effect of increasing the value of the land where they occur. Good schools, roads, hospitals and parks make locations more desirable. Property taxes are high here. For an average one family home many folks pay eight to ten thousand dollars per year. But agricultural land taxes are low because of the agricultural exemption. If a land owner is involved in commercial agriculture or rents to a commercial farmer, they pay only a fraction of the land value taxes they would otherwise. On its face this looks like a good idea, because it seems to incentivize keeping land in agriculture, which it does. But it also shifts tenure away from farmers by shifting how we accumulate value in land. Instead of allowing capability to determine the value of land, agricultural tax relief lets the expectation of increased location value dominate.
Land is a fixed quantity. We don’t expect any more to come into existence. Land is an essential component in meeting every human need. When we talk about owning land, what we mean is the socially granted privilege of determining the use of locations. As society grows and grows more productive, the demand for the use of locations increases, the value of land goes up. Short of a plague, or colonization of other planets, location values will increase. And the portion of return from the use of the location will continue to shrink compared to the cost of getting access to it. Agricultural exemptions make the cost of holding land low and the cost of obtaining it high. They help to make farm land a secure long term investment with a high entrance cost. This puts ownership out of reach of farmers generally and young farmers particularly.
Of course agricultural exemptions enjoy support of farmers and non farming land owners, and it is easy to imagine agriculture being driven out of our community without them. But they are strategies aimed at symptoms of a problem, not its root cause. At the heart of many of our economic problems is our concept of property rights in land. It is the concept that drives reward out of productive activities, divides society into rich and poor, makes farmland fall into the hands of elites, and erodes our ability to practice good land management that produces food that supports our well being.
The claim of property in land is really a claim on the labor of those who use land. It is fundamentally different from a claim of property in the products of land. Our bodies are composed of air, water and food drawn from the environment. Supporting the idea of human worth requires the acknowledgement of peoples claim to the products of the earth. People need food, clothing and shelter and the ability to transform nature to meet their needs. But the idea of property in land is different. We interact with nature, and through our efforts it becomes properties of us. Our work becomes our bodies, our thoughts, our expressions. Land never becomes a property of us. We are always a property of land. Land exists without us, but we do not exist without land.
All economic activity is simply the application of human effort to land. Even a programmer developing apps works with energy from coal, minerals from mines at an office built on land and their thoughts are powered by sunlight that fell on plants growing on farmland. The value they generate for society that lets them trade their labor for the products of land they need is in the increased ability their app gives to others to apply their labor to land or to enjoy its use. Our belief in the idea of property in land allows someone to claim a portion of the labor applied in every location where work takes place. That part of labor devoted to access nature is called rent. When we grant the privilege of collecting land rent to individuals we are granting them a property claim to people.
If we like the idea of farmers having security to use land during their productive lives, we need to examine how we grant each other the use of land. Farmers are laborers and they require land to apply their labor. Modern agriculture is incredibly productive and can easily generate the real costs of its use of nature. If we recognize that all people have an equal claim to nature and collect as society the value we attribute to land and distribute it to society equally, the issue of farm tenure would pass away. If people had to pay the true cost of the nature they used the value of land would fall to nothing.
Young farmers can’t afford to buy land because land does not have a price.