Senators Worried About Aging Farmers

OMAHA (DTN) -- Zippy Duvall, president of the American Farm Bureau Federation, warned senators on Wednesday farmers could face a mental-health crisis if trade wars aren't resolved by the time of the fall harvest.

Duvall testified before the U.S. Senate Special Committee on Aging about workforce challenges and an aging farmer population.

Sen. Raphael Warnock, D-Ga., said he had heard from older Georgia farmers who are being forced to sell off parts of their land and take out second mortgages to stay afloat right now. Warnock attributed the challenges not only to natural disasters and rising costs that have created setbacks for producers but also trade disruptions.

"On top of all that, we're now dealing with pointless trade wars and these trade wars will make it even harder to sell their products to international markets," Warnock said.

Duvall, who also is from Georgia, said he had heard similar stories from farmers.

"Of course, farmers basically right now are supportive of this administration's efforts to try to level the playing field. We're all praying it all works," Duvall said.

Duvall added AFBF's policy opposes tariffs because agriculture often is the target of retaliation.

"But we also know that our farmers have to have that level playing field because 20% of our income is from trade and they have got to have it so they're willing to wait," he said.

Still, Duvall said he is worried about farmers becoming overleveraged with their credit trying to get through the current crop year.

"If we don't have solutions to the trade problems and the tariff problems and everyone starts selling a very, very cheap commodity, you can't pay for the expenses and inputs they bought to grow that commodity," Duvall said.

Farmers could be forced to ask lenders to borrow for next year's crop without having paid off this year's operating loans.

"We're going to have a serious, serious problem and you're going to see farmers and ranchers all over this country go through mental health issues like you've never seen before since ... the '80s and it's going to be very, very difficult," Duvall said.

It should be noted the Trump administration has repeatedly said a trade-aid package would be developed to support farmers if they are negatively impacted by tariffs and a decline in trade.

Duvall laid out the case that Congress and the Trump administration need to fix trade, reform the H-2A guest-labor program and pass a new farm bill.

THE COUNTER: CHEAP IMPORTED PRODUCE

Somewhat countering Duvall's concern was Jim Alderman, 78, who raises vine tomatoes and mixed organic vegetables on 1,200 acres in southern Florida. Alderman has to rely on H-2A workers that cost upwards of $25 an hour when housing and other costs are factored in. He's competing against Mexican vegetable growers who might pay workers just $10 a day.

"They are great labor. They are good. Without them we couldn't harvest our crops, but we can't compete against cheap labor," Alderman said.

Alderman said Mexico is dumping tomatoes into the United States. Buyers are often seeking produce below Alderman's cost of production, he said. "I can't pick, pack and grow them for $10. I can't pick them for $10."

Alderman added, "There has got to be some help with the balance of trade."

He called for tariffs on cheap Mexican produce imports, but said the tariffs also need to be high enough to offset the higher production costs U.S. farmers face.

Excluding products such as beer, USDA data shows imports of horticultural products from Mexico -- primarily fruits and vegetables -- rose from $20 billion in 2020 to $30 billion in 2024.

Addressing problems with the next generation of produce farmers, Alderman said expensive land, equipment and labor costs all put pressure on them. "The incentive to make a profit is not there."

SUCCESSION CHALLENGES

Aaron Locker, managing director of Kincannon & Reed, an executive search firm for food and agriculture, also told senators the leadership pipeline for the next generation "is under serious strain." Agriculture faces an "acute succession challenge" that goes back to the 1980s farm crisis and its ripple effects. There are fewer people nationally interested in agriculture as a career. Coupled with that, businesses and farmers in general are not focused on succession and competing for leadership talent.

"Fewer than one-third of the companies we work with have formal succession plans," Locker told senators.

Passing a farm bill provides stability, Locker said, but there must also be an effort to promote agriculture "as a mission-driven, modern career path." That also demands investing in leadership development, apprenticeships, community college programs, and also getting urban and suburban areas into agriculture.

"If we want a strong agricultural future, we must invest in people. We must identify and support leaders early, and we must give them room to grow," Locker said.

Locker's comments come as USDA has eliminated programs to promote more minorities going into agriculture as well as eliminate grants and programs meant to boost more interest in urban agriculture. USDA's budget proposal, for instance, would eliminate a $7 million program to promote urban agriculture.

ESTATE TAXES AND BUSINESS ASSETS

Chris Wolf, a professor of agricultural economics at Cornell University, focuses on dairy policy and farm business management. He noted New York right now is seeing $2.5 billion in investment in the dairy industry. Some of the concerns over aging farmers are masked by the fact that more farms are now multi-generational operations. The primary operator is older, but sons and daughters are working under them rather than stepping away and buying their own property.

Farming is increasingly capital intensive and that capital accumulates over time, so older farmers hold the lion's share of assets. Those business assets are often the retirement plans for farmers, so succession planning is essential.

Sen. Tommy Tuberville, R-Ala., asked about advocating for the repeal of the estate tax. Locker said even small farmers have a lot of assets so passing the farm to the next generation comes with significant costs.

"It takes a lot to run a farm today and, so, doing away with the estate tax -- the death tax -- is the right thing to do to be able to continue to pass it down to the next generation. Otherwise, it becomes cost prohibitive," Locker said.

Duvall and Alderman both agreed. Alderman said, "It's double taxation. It shouldn't be there. Already paid the taxes once. Why are you going to just put somebody out of business and make them sell their business or the farm?"

In general, farm assets make up only about 2% of all assets taxed on large estates. The bulk of assets taxed by the estate tax are stocks, bonds and commercial real-estate property, according to annual spreadsheets produced by the IRS.

The budget reconciliation bill would increase the estate tax exemption to $15 million for a single person or $30 million for a couple. The exemption would then increase each year based on inflation. Sen. Cindy Hyde-Smith, R-Miss., this week also introduced a bill that would increase Section 2032 A, a special land valuation tool for farmers. Under Hyde-Smith's bill, farmland exemptions would go from $1.4 million to $15 million as well.

To watch the full hearing, go to https://www.aging.senate.gov/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

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