KEMPTON — A large, wooden ox yoke sits in Tom McKinney’s farm office. It’s the same one his ancestors used to clear the land they purchased for $125 in 1836 to turn into tillable topsoil.
Today, almost 190 years later, McKinney and his extended family are still farming that ground in Tipton County, where they grow mostly corn and soybeans.
But the future of the property McKinney owns is murky. The 66-year-old and his wife, Karen, aren’t sure whether their own children want to carry on the tradition. Two of their kids no longer live in the state.
“I guess we’re just a little bit undecided,” he said.
McKinney is one of more than 32,000 Hoosier farmers at retirement age who will soon be exiting the field. Many of those growers wonder what do to with their land if their kids aren’t interested in the family business.
The trend could be foreboding in Indiana. Growers 66 and older make up a third of all farmers in the state and roughly 10% of all retirement-age farmers in the nation. At an average age of 56, Hoosier growers are the oldest workforce in Indiana.
These aging farmers own a large part of the state’s agricultural ground. Nationally, 40% of the farmland is owned by those 65 or older. Over the next 20 years as farmers retire, it’s expected that about 350 million acres will change hands, according to a report from the U.S. Senate Committee on Aging.
The question worrying some: Who will eventually own the land — commercial developers, foreign nations or the next generation of young American farmers?
‘CHALLENGES, HURDLES’
Isaac Schroeder would like to buy more farm ground. The 35-year-old and his wife, Kyla, 33, own 80 acres in Perry County where they raise 20 beef cows. Both work other full-time jobs and neither came from a farming family.
The couple’s dream is to expand the herd and make cattle farming their primary occupation. But that dream seems nearly impossible, Schroeder lamented.
“There’s a list a mile long of challenges and hurdles to jump through to get to where you can farm full time,” he said. “I’d love to do that. But just realistically, I don’t know that that’s ever going to be a possibility.”
One of the biggest hurdles the couple overcame to start their operation in 2016 is the same one they face now: the skyrocketing price of farmland. In Indiana, the average cost of top-quality soil this year hit a record high at nearly $14,400 an acre. For comparison, that same ground cost $2,715 in 2000.
The only way the Schroeders could afford their first piece of land came by qualifying for a special, low-interest loan for beginning farmers offered through the U.S. Department of Agriculture’s Farm Service Agency.
As hundreds of millions of acres of American farmland come up for sale, many young growers say the price of ground is pushing them out of the industry. It was the number one challenge cited by those 40 and under in the most recent 2022 National Young Farmer Survey.
Farmland prices are rising as the need for agricultural workers is expected to expand. Fueled by a growing demand for food and ag-based products in the coming decade, the U.S. is projected to have 85,600 openings for farmers, ranchers and other agricultural managers by 2031, according to the U.S. Bureau of Labor Statistics.
If land prices stay high, the future of American agriculture could be grim for young producers, argued David Howard, policy development director for the National Young Farmers Coalition, which conducted the survey.
“Land access is at the heart of the crisis,” he said.
The most recent 2022 Ag Census by the USDA provided some optimism for Indiana. The report showed that the number of farmers 34 years of age and under climbed 7%, from 10,340 to 11,060, over five years. Young farmers make up 11.7% of the state’s total agriculture population, ranking second in the nation behind Pennsylvania.
Even so, the number of farmers 65 and older spiked by 15% to 32,180 during the same time period, far outpacing young growers.
Adding more concern, smaller farms in Indiana continued to disappear and consolidate with larger ones and tie up ground young growers might purchase to start or expand a business, Howard explained.
From 2017 to 2022, the number of farms in the state with 2,000 acres or more jumped by nearly 17%. Every other farm size decreased or stayed virtually the same.
The state also lost 345,680 agricultural acres from 2010 to 2022, marking a decrease of 1.9%, according to a report released this year by the Indiana Department of Agriculture. Most of the lost farm ground became residential property in areas around cities and suburban communities.
Add it up, and the inability for new farmers to gain access to land is reaching a critical point that could jeopardize the nation’s agricultural future, Howard argued.
“Land conversion and land consolidation, these are huge, huge threats,” he said. “I think that there’s a risk in not acting to address those threats in a really thoughtful way.”
‘A TIPPING POINT’
State and federal lawmakers are starting to tackle issues created by high land prices combined with the nation’s aging farm workforce.
States such as Iowa, Nebraska, Kentucky and Minnesota have passed beginning farmer tax credits to encourage property owners to sell or lease ground to up-and-coming growers. The programs offer a kickback to landowners, and some credits are available to use against corporate income tax.
Indiana Sen. Shelli Yoder, D-Bloomington, introduced similar legislation this year that would have provided in total $5 million in tax credits to farmers who lease of sell land, machinery, barns or other assets to new producers.
The bill never received a hearing and died upon arrival at the Republican-led statehouse.
“This really does help land-access issues and gives opportunities for our next generation of farmers,” Yoder said of the proposal. “It also provides our current farmers … a way to pass that land on to somebody else who is interested in farming for the next generation.”
The legislation has gained bipartisan interest since failing to receive a vote in January, according to Yoder, who said she plans to introduce the bill again next year.
U.S. Sen. Mike Braun, the Republican candidate for Indiana governor, co-sponsored federal legislation aimed at getting younger people into agriculture.
That includes offering federal student aid for job training programs like agriculture certificate programs and making it easier for agriculture businesses to provide apprenticeship programs to employees.
“This is a big priority for Hoosier farmers and families,” Braun said in a release. “We cannot afford to stand back and watch as the nation’s agricultural industry reaches a tipping point without a plan to feed the future.”
Groups like the National Young Farmers Coalition are also pushing to make a one-time program that helps new and underserved farmers a permanent part in the next Farm Bill.
The USDA last year allocated $300 million to fund 50 community-based land-access projects, including one in Indiana. Bills have been introduced that would allocate $100 million annually to the program.
ESTATE TAX TERROR
For McKinney, the 66-year-old farmer in Tipton County, the biggest concern isn’t getting younger farmers onto the land. It’s the prospect of new estate tax policy that he said would jeopardize the survival of family-run farms.
A current policy known as “stepped-up basis” allows landowners to pass along their property at death to an heir without paying any capital gains tax. If that went away, many growers inheriting significant amounts of property could be on the hook to pay hundreds of thousands of dollars in taxes.
McKinney explained most farmers would have to actually sell farm ground to afford the taxes, creating a major obstacle for the success of family farms that already operate with tight margins.
“It would kill the American farmer,” he said.
Both President Joe Biden and Vice President Kamala Harris, as part of her presidential campaign, have proposed altering the way stepped-up basis works. Many estate planners consider the policy a tax loophole that allows some to avoid paying capital gains.
Farmers are paying close attention to the presidential election and the estate tax policies proposed by Harris and former President Donald Trump, explained Michael Langemeier, associate director of Purdue University’s Center for Commercial Agriculture.
“I do think it makes a difference who gets elected,” he said. “I think they do have different visions. One of the things that’s lurking behind all of these issues is what they do with the estate tax.”
But Schroeder, the 35-year-old cattle farmer in Perry County, isn’t concerned about tax policy. He emphasizes that more young farmers getting into the business is good news for the future of Indiana agriculture.
That’s especially true at a time when thousands of aging Hoosier farmers are set to retire and put large portions of the state’s farm ground up for grabs, he said.
“As demographics of the farm are getting older, how do we adapt to that?” Schroeder said. “I think anything we can do to help protect agriculture and help continue to feed people is a win.”