Planning What’s Next: Building the Next Generation on the Land
One of the most important, challenging, and rewarding things that we can do as the current generation of agriculture is to help secure the future of agriculture through thoughtful investment in our land and support of those who are coming next.
Whether you own or have inherited a piece of farmland or you are making a plan for the farm or ranch that you own and operate – you have a world of options available to choose from:
- from selling or leasing your land, including to a new and beginning farmer or rancher;
- setting up easements or conservation to ensure and invest in your land’s agricultural future;
- supporting your own next generation as they take over the farm or ranch – either in one big step or many steps over time; or,
- by making a plan for your land in the future, including through making a will or a trust.
Whatever your goals – whether you have a new generation who will inherit your land or you are hoping to support a new or beginning farmer or rancher on your land – USDA can help connect you to available resources.
It is important to know that no single solution fits everyone, and you should research, seek guidance, engage transition professionals in your community, and make the best decision for your land according to your own individual priorities.
What can USDA offer me?
- Customer Service: Learn more about how you can keep your land a healthy, working farm and support local farmers by contacting your local Department of Agriculture Farm Service Agency County Office today. FSA can connect you with free resources and information on your options for your land.
Tools for Supporting Your Land: USDA offers several tools for landowners to invest in and protect their land, including help supporting their transition to a new generation on the land.
- Agricultural Conservation Easement Program. The Natural Resources Conservation Service provides financial assistance to eligible partners for purchasing agricultural land easements that protect the agricultural use and conservation value of eligible land. In the case of working farms, this program can help farmers and ranchers keep their land in agriculture.
- Conservation Reserve Program Transition Incentives Program. The Transition Incentives Program provides for the transition of expiring Conservation Reserve Program (CRP) land from a retired or retiring owner or operator to a beginning, veteran, or underserved farmer or rancher. This program can provide annual rental payments for up to two additional years after the expiration of the CRP contract, provided the transition is not to a family member.
- Farm Loans. Often called the "lender of first opportunity," the Farm Service Agency (FSA) makes and guarantees loans to farmers who are unable to obtain financing from commercial lenders. FSA’s lending assistance can be a valuable tool in certain transition situations by helping a producer pay normal operating or family living expenses, purchase and develop farmland, and buy livestock and equipment.
FSA Land Contract Guarantees. FSA land contract guarantees are a tool to help retiring farmers get assurances on the future of their land and financial interests when selling to a new farmer or rancher – and to help new and beginning farmers enter into rent-to-own situations.
- How it works: A retiring farmer and a new or historically underserved farmer or rancher enter into a contract on a piece of land being sold. The retiring farmer maintains an ownership interest in the land until the completion of the contract. The new farmer purchases interest in the land gradually over the length of the contract. FSA guarantees the payment of a land contract held between the purchaser and seller for 10 years.
Benefits to landowner: Payments on the contract are made as agreed by the landowner and purchasing beginning farmer or rancher, creating long term revenue streams. For many landowners, this can also be a good investment tool as you get a higher interest rate than other types of savings accounts. Landowners can choose between two types of assurances offered, depending on which option of contract you choose (may only choose one):
- Prompt Payment Guarantee: if the purchaser does not make payments on the account, FSA will make payments on their behalf up to a certain point, in execution of the contract.
- Standard Guarantee: USDA will pay 90 percent of any losses once the property is sold again.
- Benefits to new farmer: new farmer has access to an affordable interest rate (not to exceed 3 percent above FSA’s direct farm ownership interest rate); they are able to purchase land on installment; and, it requires a smaller down payment than conventional real estate loans.
- For more info, please visit your local FSA office.
- The Conservation Reserve Program (CRP) pays a yearly rental payment in exchange for farmers removing environmentally sensitive land from agricultural production and planting species that will improve environmental quality.
The Conservation Reserve Enhancement Program (CREP), an offshoot of CRP, targets high-priority conservation issues identified by government and non-governmental organizations. Farm land that falls under these conservation issues is removed from production in exchange for annual rental payments.
Key Resources from Partners
Learn from the Experts:
- Cooperative Extension. USDA and agricultural colleges around the country work together to support an extensive network of state, regional, and county Cooperative Extension offices, that can help answer questions about your operation and address common issues faced by agricultural producers. These offices translate the knowledge gained from research into education programs that help provide solutions to challenges people face in agriculture and conduct workshops and educational events for the agricultural community. You can also crowd-source research-proven and science-based knowledge via eXtension, the Extension system's national online interactive learning environment.
FarmAnswers.org, a production of the University of Minnesota, and funded by USDA’s Beginning Farmer and Rancher Development Grant program as the national program clearinghouse, makes available several key guides, including:
- The Farm Transition Toolbox. Bringing in the next generation to continue the farming legacy can be a rewarding yet challenging venture. The Farm Transition Planning toolbox provides you with tools and resources to help you successfully transition the farm to continue its legacy.
- The Farm Answers Library, which includes resources on everything from tax and legal issues to the basics on selling and leasing land.
- The Farmland Information Center is a clearinghouse for information about farmland protection and stewardship developed by American Farmland Trust in partnership the Natural Resources Conservation Service. The clearinghouse offers an online collection of laws, literature, sample documents and statistics and a team of information specialists who provide direct technical assistance to anyone interested in saving farm or ranch land.
- USDA Partners, the National Center for Appropriate Technology and The National Sustainable Agriculture Information Service have collaborated on a guide, available both online and in print: “Finding Land to Farm: Six Ways to Secure Farmland.”
There are also many resources available from Cooperative Extension to help existing farmers begin to plan to transition their businesses, assets, and legacies to the next generation, including:
- Montana State University Estate Planning Resource
- Oklahoma State University Farm Transitions Workbook
- Virginia Tech Legacy Planning for Forest Landowner Short Course
- Virginia Tech Whole Farm Planning Land Acquisition and Tenure
- University of Maine Website “Find Resources and Assistance - Searching For, Assessing, and Acquiring Land"
- University of Vermont Farm Land Access, Succession, Tenure and Stewardship (FARMLASTS)
- University of Florida’s Florida Forest Stewardship Estate Planning Website
- Cornell’s Directory of Northeast Land Link Programs
Credit: Some State and Federal loan programs work in tandem with commercial farm banks and federally chartered, borrower-owned lending institutions to service agricultural loans. The nation's farm banks (defined by the Federal Reserve Board as banks that have above average proportions of farm real estate and production loans in their loan portfolios) offer a variety of loans to small and large farms and agribusiness firms – and many have a focus on new and beginning farmers and ranchers. Explore the list of guaranteed lenders in your area.
Please note that this list is intended to get you started by providing very basic lender contact information. It may not contain all agricultural lenders in your area, and some lenders have multiple branches which are not specifically listed. Your local FSA Farm Loan Team can help you connect with a local lender, too, or provide you with a list of lenders known to make agricultural loans in your geographic location.
- Partners near You: There are likely organizations near you that help support all or some aspects of farmland access and transition. If you need help connecting, USDA can offer an introduction to these community partners. Please visit us at an office near you to get started!