FarmLand ACcess in the Hudson Valley
The subdivision of former failed dairy farms is creating a farmland access crisis in the Hudson Valley.
Leasing farmland is an option for newbie farmers but leasee and land owner must align their expectations to ensure successful relationships.
New conservation easement tools that include affordability options will make more farmland accessible to the next generation of farm owners.
The future of farming in the Hudson Valley will require structured collaborations, resource sharing and new ownership models.
What is responsible for the regional farmland access crisis, how is it being addressed, and what more needs to be done to address it? We speak here to key stakeholders about what they believe needs to happen to secure land for future generations of Hudson Valley farmers.
When Chris Cashen was growing up in Columbia County in the 1970s, four family dairy farms operated within two miles of his home. Not a single one remains in business today. As Cashen explains, paraphrasing former Agriculture Secretary Earl Butz’s dictum: “they’ve either gotten bigger or gotten out.”
Cashen began farming 25 years ago and now operates a diversified farm on over 200 acres in Claverack. He had the good fortune to inherit a share of his grandfather’s 180-acre farm and to expand his acreage when land prices were relatively affordable. But, he maintains, new farmers looking to purchase land in the county today will be hard pressed to secure it.
Contributor: Susan Arterian Chang
As farms get purchased for estate living they are turning into a stranded asset from a long-term agricultural perspective.
June 29, 2019
HOW FARMLAND BECOMES A STRANDED ASSET
In recent years many of the region’s former dairies have been subdivided for second family home development on plots so small that they cannot support a farming livelihood. Before they are subdivided these agricultural tracts have typically been priced for development. And when they remain intact after sale they are often developed in ways that effectively price them out of a typical working farmer’s reach, if and when they return to the market. As regenerative farming specialist Connor Stedman reports: “As more of those properties are purchased and redeveloped by investor class money with a non-agricultural vision of housing, lifestyle, and aesthetics, even alongside agricultural goals, it basically creates a new class of holdings that function as stranded assets from a long-term agricultural perspective.”
A farmer’s inability to make capital improvements on leased land can become an extremely limiting factor.
LEASING AS A PATH TO OWNERSHIP
It’s no surprise that 70 percent of farmers under 30 are turning to leasing land. For a newbie farmer it may be a great way to test the waters, says Marissa Codey Director of Agricultural Programs at the Columbia Land Conservancy. The CLC established its Farmer Landowner Match program in 2008 to help landowners and farmers looking to lease land build relationships of trust that hopefully translate into farmland remaining in viable agricultural use over the long term. CLC’s Match program is now a partnership with Dutchess Land Conservancy, and the Hudson Valley Farmlink and statewide Farmlink Network have grown out of the Match model.
Landowners with no experience in agriculture often have unrealistic notions of what a farmer can pay for a land lease. Wes Hannah and Bryn Roshong of Solid Ground farm in Ulster County have first-hand experience with landowners who demonstrate scant understanding of the economic realities of farming. Hannah reports that a potential lessor once asked for $10,000 a year for the lease of a couple of acres. “If you buy land with the thought that you’re going to lease it to farmers,” Hannah maintains, “you have to do it for something other than profit: the environmental impacts, local economic impacts.” Cody reports that the Conservancy advises landowners that “generally a farmer’s rental payments will be insufficient to both cover expenses and make a profit.”
Landowners are also often reluctant to give farmers the security of a long-term lease. Hannah and Roshong are investing $10,000-20,000 annually in infrastructure on the land they’re leasing under a five-year term. Although they’re reasonably comfortable with the arrangement at the moment, Hannah admits: “We’re taking a risk.”
Tianna Kennedy and her business partner, Walter Reiman, at Star Route Farm in Otsego County were recently able to secure a ten-year lease when the farmland they were operating on for a number of years transferred to a new owner. They are only now beginning to contemplate making investments for the long-term. “At least now we can start a business that can be transferred,” Kennedy says, “even if the owner doesn’t want to sell the underlying land.”
SALE OF DEVELOPMENT RIGHTS
At some point in time most farmers like Kennedy find even long term leases too constraining and yearn to own the land on which they’ve been making improvements with uncertain security, and in which they have invested their sweat equity. Local land conservancies, employing a creative mix of conservation tools, including the purchase of development rights with affordability provisions, are stepping in to play an increasingly active role in making farmland affordable when these farmers are ready to assume the responsibilities of land ownership.
Columbia Land Conservancy has been a regional leader in these efforts, beginning in 1999 when it began making cash purchases of farmland development rights under New York State’s Farmland Protection Implementation Grant (FPIG) Program.
The New York State 2018 Working Farm Protection Act—spearheaded by the Young Farmers Coalition—a new and potentially powerful farmland access and affordability tool—adds an optional affordability provision to the FPIG program that can be included in the calculation of the dollar amount of a conservation easement awarded to landowners. Under the easement the land can be sold only to qualified farmers at affordable agricultural value.
Landowners with no experience in farming need to manage their expectations of how much they can earn from leasing.
FARMLAND INVESTOR FUNDS
Farmland investor funds offer another pathway to land ownership, sometimes complemented by the sale of conservation easements. The Local Farms Fund typically identifies a farmer with a viable business plan and raises money from impact investors to purchase land to lease. Investors receive a modest rate of return based on revenue from leases and the eventual gain when a farm is sold to the leasee. Farmers sign a 20-year lease with an option to buy at a specified price, usually in 5 years. Rent is often set lower in the early years of the lease and escalates as the farm becomes more financially stable. Most recently the fund purchased a 63-acre farm for the farmers of Featherbed Lane, a draft-horse-powered vegetable CSA. Through a conversation easement it sold, the fund was able to reduce the purchase option price.
Educating impact investors about the nature and risks of farmland asset investing is challenging, admits Kevin Egolf, manager of the fund. Small farm businesses have unique attributes that are not always quantifiable or comparable across farms. What’s more, he reports, farm assets don’t correlate with standard market benchmarks. While projected returns may not be as high as what investors are led to expect from the stock market, volatility is often lower, translating into a more predictable return.
Using a mix of conservation tools and leveraging new legislation, land conservancies are helping to return farmland to affordability.
Investors in small farms must also be open to redefining value beyond financial terms, and expand to include the environmental and community impacts of their investments. “We are now trying to find a way forward that is way more relationship-based,” explains Martin Ping, Executive Director of Hawthorne Valley Association in Columbia County. “If financial capital enters into this investor space the wrong way it can muck up the system we are trying to build as much as it can help it. We need to get the financial capital piece to work in an inspired, coordinated, collaborate, patient way.”
IN SEARCH OF ALTERNATIVE OWNERSHIP MODELS
As the barriers to ownership for new farmers continue to rise, more farmers are looking to alternatives to individual ownership. Says Stedman: "The future of successful agriculture is going to involve an increase of collectivization like agricultural versions of the urban community land trust: a legal structure and set of relationships that give people lifetime transferable and renewable leases with equity tied into them. Ideally this model would allow farmers to invest in the development of their farm property and business, and build equity through that process, even if they are not holding full fee ownership of the land."
Codey reports that CLC’s conservation easements for the last three or four years have included hybrid ownership models that separate ownership of land from built structures. For example with its recent purchase of the Thompson-Finch Farm in Ancram, CLC extended a long-term lease to the farmer enabling the latter to retain ownership of farm buildings and to make improvements in infrastructure like fencing and irrigation. The farmer can recoup those investments when the lease is transferred. CLC hopes to facilitate more of these deals on privately owned land as well.
Stedman says he supports the ambitious movement to integrate reparations into land ownership transfer models: “I am excited about Soul Fire Farm’s Reparations Map,” he says, “and the open conversations now taking place about large transfers of wealth and power to people from whom it was taken historically.”
Hannah would like to see more landowners and farmers enter into more meaningful partnerships. Egolf agrees that when a landowner is willing to make capital improvements to support a farm operation they are likely to attract more experienced farmers. Roshong imagines the day when the tables turn and a farmer is in a position to earn income by offering land leases to a second home-owners who want the best of both worlds, a country getaway on a working farm without the responsibilities of farming.
The exploration of new, shared ownership models—including land trusts, cooperatives, and hybrids—needs to be incentivized.
Investors in small farms must expand their definition of value to include environmental and community impacts.
A concerted all-hands-on-deck approach across all stakeholder groups is crucial to solve the farmland access crisis.
More regional stakeholders are recognizing the urgent need to devote as much time and resources on addressing farmland access and ownership transition as on technical training and marketing services in support of established farmers. Tianna Kenndy expresses hope that “we are on the brink of a new era” of heightened awareness of this emergency, citing the response of Oneonta-based Center for Agricultural Development & Entrepreneurship (CADE), whose new executive director Phoebe Schreiner is helping the 26-year old ag marketing and business development nonprofit pivot to devote more attention to land access and farm preservation.
Hannah is also excited to witness the successes of organizations like the National Young Farmers Coalition and National Farmers Union. “As someone who has been involved with the NYFC for six or seven years now,” he says, “we’ve had a lot of recent victories—the NYS Working Farm Protection Act, for example. All of that is super-important and a great example of positive collaboration.”
Stedman concludes, however, that given the urgency of the challenge, more structured collaborations and coalition building needs to happen quickly across stakeholder groups. Producers, financial institutions, investors, service providers, government, philanthropic funders, and nonprofits must come together to strategize and advocate for the cause. “Just moving around the current pieces on the chessboard,” Stedman reflects, “isn’t adequate to what’s needed.”
Read this story on our sister site: The Field Guide to a Regenerative Economy.
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