Tackling Challenges Facing Farmers & Ranchers Welcome to Nebraska Introduction 2019 AgrAbility National Training Workshop Lincoln, Nebraska

CHALLENGES Securing the next generation Keeping farmers farming why are these important? 1 in 4 jobs in NE is related to agriculture (farming, ranching, agribusiness) Among the leading producer of corn and cattle nationally for many years #1 cattle on feed #1 popcorn (45% of US popcorn supply is grown in NE) #1 Great Northern Bean production #3 corn for grain production

Challenge 1 - Securing the next generation BEGINNING FARMER TAX CREDIT ACT Neb. Rev. Stat. §§77-5201 to 77-5215   REGULATIONS Title 91, Nebraska Administrative Code, Chapter 1 SECURING THE NEXT GENERATION OF FARMERS AND RANCHERS Concerned about our aging population of farmers and ranchers. Who are our future farmers – what challenges do they face? Competition with established farmer, capital intensive How can we help secure the next generation?

nextgen.nebraska.gov Karla Bahm Nebraska Department of Agriculture Supporters – farm organizations, ag bankers, commodity associations (livestock commodity groups, corn growers, soybean growers, etc) Karla Bahm Nebraska Department of Agriculture

NEBRASKA INCOME TAX CREDIT Personal Property Tax Exemption Finance Course Reimbursement tax credits for owners - finance class reimbursement - personal property tax exemption Tool for beginners / incentive for owners

Tax credit is the most used Needed: Beginning Farmer – Asset Owner – Nebraska Asset - Lease (minimum of 3 years) Benefit to BF – access to asset for 3 years, long term relationship, possible successor, learn skills, build equity Benefit to AO – 3 years of NE refundable tax credits, pay-it-forward help a beginner, opportunity to mentor a beginner

Eligibility Requirements Beginning Farmer Eligibility Requirements Nebraska resident Farmed <10 of 15 years <$200,000 family net worth Majority of labor and management Intent to farm full-time Experience / Education Approved finance course  

Eligibility Requirements Asset Owner Eligibility Requirements Owner of the asset File Nebraska Income Tax Return  

a s s e t s assets: row crops, pasture land, cow/calf share (beef / dairy)

a s s e t s livestock facilities, equipment, machinery, storage facilities

TAX CREDITS Cash Rent: Share Crop: $50,000 x 10% = $5,000 200 acres x $250/acre = $50,000 $50,000 x 10% = Share Crop: 200 acres x 200 bu/acre x $3.50/bu = $140,000 $140,000 x 50% x 15% = $5,000 Review how tax credits are determined; refundable tax credit, issued annually for each year of the 3 year lease Forecasted market price tool set by Board $10,500

FAMILY Applicant Succession Workshop Succession Plan Great Grandparents Grandparents Parents Aunts Uncles Applicant Siblings Children Related parties – succession plan requirements: attend workshop; have a written succession plan Children Grandchildren Succession Workshop Succession Plan Great Grandchildren

SUCCESSION PLAN Written, signed document between the beginning farmer and the asset owner setting forth a process and timetable that provides a reasonable manner and probability of successful transfer of assets to the beginning farmer. May include conditions, benchmarks and performance measures. What is a succession plan? Planning is complex Do I want a successor – who will it be Transfer the assets or pass on a business Fair vs equal – multiple siblings Communication – Communication – Communication Workshops – one-on-one clinics

APPLICATION PROCESS Submit application & required documents Review & prepare for board Presented to board for approval   Applications for BF & Owner – download from website BF Docs – Net Worth Statement – Balance Sheet Projected Cash Flow Analysis Review application process: NDA’s administrative role; Board make-up; approval process

2015 Survey

2015 Survey

By the Numbers $12.5m tax credits (2001-2017) 450+ beginning farmers 79,000+ acres (2011-2017) $70,000 annual administrative budget

Win for the asset owner – they helped a beginner get started Win for the beginning farmer – Win for Nebraska nextgen.nebraska.gov

Challenge 2 – Keeping farmers farming USDA GRANT FUNDED PROGRAM Agricultural Credit Act of 1987 FARM MEDIATION ACT Neb. Rev. Stat. §§2-4801 TO 2-4815   REGULATIONS Title 91, Nebraska Administrative Code, Chapter 2 Ag crisis of 1980s

negotiations.nebraska.gov Karla Bahm Nebraska Department of Agriculture

USDA CERTIFIED AGRICULTURUAL MEDIATION PROGRAMS CAMP – 41 certified ag mediation programs AgrAbility client Not meeting financial obligations because of an accident / disability

MEDIATION Who What Why Where When How

MEDIATION Who What producer borrower creditor USDA agency agricultural credit USDA adverse decisions lease disputes family farm transitions farmer/neighbor organic certification

MEDIATION Why When/Where How alternative to litigation confidential cost effective quick resolution parties generate solutions preserve relationships resolution When/Where 45-60 days neutral location How request notification preparation

MEDIATION Process/Preparation Intake Clinics Financial Analysis Intake – is your issue right for ag mediation or mediation in general; what is the issue; do you need help to prepare, where might you get that help; we can provide resources (mental health, legal etc) Clinics – free consultations with farm law attorney and financial counsel to discuss your specific issue Financial analysis – free in-depth look at the farm’s financial statement and cash flow, help evaluate the overall picture and look at restructuring and refinancing possibilities Importance of preparation

MEDIATION Mediation Session Introductions Describe the Process Set guidelines for dialogue Allow parties to be heard Identify and clarify issues Problem solving Test solutions Draft agreement Review Period

GOAL - RESOLUTION negotiations.nebraska.gov

Nebraska Department of Agriculture Thank you! Karla Bahm Nebraska Department of Agriculture 402-471-4876