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I mean, inheriting a farm is inheriting a lot of money. Were family farmers perfectly rational economic actors, they'd presumably sell their inherited farm and
by simplicio 9y ago
I mean, inheriting a farm is inheriting a lot of money. Were family farmers perfectly rational economic actors, they'd presumably sell their inherited farm and use the proceeds to buy one more suited to the newer, locally grown, organic type farms that are more insulated from the economies of scale that are driving them out of business.
But obviously people aren't such rational actors, and farmers have emotional attachments to their farms, the rural areas they grew up in, etc. And so they keep trying to make the old model work, increase their debt loads and hope things will turn around until its too late.
- jefurii 9y agoI can't speak to anyone else's experience but when my uncle took over the (CA Central Valley) family farm he didn't experience a windfall. And most years he made more money at his side job (substitute teaching) than from the farm.
- newfoundglory 9y agoThe windfall option is selling the farm, not keeping it. And if you inherited something that nobody wants to buy then obviously you're in a poor situation.
- roel_v 9y agoBut did he inherit it, or bought in? If he bought in at market rates (or even at a low double digit discount), it would be 'buying a job' which is seldom very profitable. That's very different from inheriting but not wanting to sell because of sentimental (economically suboptimal) reasons.
- panzagl 9y agoSelling a farm isn't like selling a house, you can go years with no offers.
- simplicio 9y agoReal agricultural land prices have been on a relatively steady increase since the mid-80's (which further suggests the issues with family farms are due to economies of scale crowding out family farmers, rather than farming itself being unprofitable). So I'm skeptical they're that difficult to unload, especially given that inheriting a farm probably isn't something that catches many people by surprise.
- lkjasdkjdjf 9y agoOne issue at least in my own state that has eliminated many family farms is the inheritance tax rate judges the value of the land on its highest possible economic value of use. This means getting taxed on subdividing the entire property and developing it not taxed on the value of the land if kept as a farm. This lead to every generational change over of a family farm to generally have to halve the size of the farm and then have a new development of NIMBY's surrounding them steadily. The farm lobby in my state has been pushing a bill to base the inheritance tax on the farm value of the land if the land is kept in production as a working farm for 15 years following payment.