Commentary

MD Farmers Enjoy High Land Prices; Protectionists Don’t

This Baltimore Sun piece exemplifies the “save our farms at all costs” mindset that is so frustrating to those of us unswayed by nostalgia and hostile to protectionism:

Dairy cows and other livestock in Maryland graze on the sixth-most-expensive farmland in the country, according to a survey released last week by the U.S. Department of Agriculture. Fueled by the red-hot market for development, the average price of an acre of Maryland farmland, including farm buildings, is up nearly 38.6 percent from last year, to $7,900 an acre. That increase compares with a rise of 11 percent for farmland in the contiguous 48 states – the biggest gain in nearly a quarter of a century. “It’s a scary situation,” said state Agriculture Secretary Lewis R. Riley. “It is a major threat to the future of farming in the state.” As Riley was quick to point out, “these prices are for land that stays in farming. If a farmer sells his land for development, the prices they get are incredible.”

I guess it depends on how you look at it. I’d bet that the farmers who are seeing their nest eggs come to fruition are pretty happy about the situation. Moving on, it starts to get a little scary once you start reading between the lines:

Riley called the rapidly escalating prices a major threat to agriculture. “The enticement to farmers is so great,” he said, “it’s hard for them to turn down the money.” Riley said that many farmers could sell their land, put the money in the bank and live more comfortably than they do laboring long hours in the field. “And when they sell,” he said, “there goes our farms.” Riley said the price of farmland makes it nearly impossible for young people who want to go into farming to buy the necessary land. “The land costs so much,” he explained, “that the economics don’t work. It’s hard to make enough money farming to pay the mortgage.” . . . . Bill Boniface, who runs a horse farm in Darlington, said the availability of land is the top concern of young farmers across the state. “They can’t get it,” he said. Boniface, 41, is chairman of the Young Farmers Advisory Board. The General Assembly created the 12-member board last year to looks for ways to draw more young people into farming. “Right now we are in a Catch-22,” Boniface said. “It’s great for farmers that their property values are so great, but it makes it almost impossible for young people to get into farming.” He said changes are needed to reverse this trend. “We need to come up with a package of things to help farmers,” Boniface said. “It should include ag-land preservation and some financial incentives. Perhaps the elimination of the capital gains tax on a farmer if he sells his farm to a young farmer.” Boniface said the legislature might want to look at reducing other taxes on farms and “do a better job of hooking up retiring farmers with young farmers wanting to get in the business. They could be the middleman.” Riley is aware of the difficulty of young people moving into agriculture. “It is nearly impossible,” he said. “You either have to marry into a farm or inherit one. “We have got to find ways to help farmers,” Riley said. “We have got to make farming more profitable. That’s how we are going to keep our farms. Right now, the incentive for them to sell out is too great.”

A few points here: 1) Where is the legitimate state interest in trying to get kids into farming? In the era of globalization and increased international economic competition, is this the wisest strategy for preparing children for the future? By no means am I suggesting that farming isn’t a legitimate professional endeavour, and kids should be absolutely encouraged to pursue that career path if that’s what’s in their hearts, but the trends seem pretty clear: the domestic agricultural sector is producing more food on less and less land with fewer workers as a result of technological advances. It’s simply not a growth industry, and efforts to preserve agriculture at all costs seem to be more rooted in nostalgia and resistance to a changing economy than anything else. 2) “We have got to make farming more profitable?” This sounds like code for more subsidies and state giveaways to me. In a free market, profits are made by innovative businesses that offer quality products that match consumer demands and preferences, not simply by government fiat. 3) Funny how the idea of reducing taxes always comes up when we want to save a particular industry. So why is it so hard for people to understand that reducing taxes is generally a good idea across the board? And check this out:

[Deputy director of the USDA’s statistics service for Maryland Jeanne] McCarthy-Kersey quoted the most recent census figures that show the changing face of agriculture in Maryland. Between 1997 and 2002, there was a 32 percent increase in the number of small farms, so-called “gentlemen farms” with sales of less than $2,500 a year. During the same span, the number of more traditional farm operations – those with sales of $10,000 to $100,000 – was down 26 percent. “Forty-three percent of the farmers in Maryland don’t count farming as their primary occupation,” she said. “They are lawyers or plumbers or some other occupation, who like living on a farm.”

More evidence to back up #1 above…farming is becoming more of an avocation than a vocation.

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.