News & Analysis

USDA rule meant to facilitate land transfers goes into effect

According to the Tenure, Ownership and Transition of Agricultural Land survey, conducted by USDA in 2014, US farmland owners expect to transfer 93 million acres to new ownership during 2015-2019.

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A new USDA rule that allows for the early termination of certain Conservation Reserve Program (CRP) contracts without penalty goes into effect today, making it easier to transfer property to the next generation of farmers and ranchers, including family members.

According to the USDA, the eligible land is among “the least environmentally sensitive” enrolled in CRP, which was signed into law by President Ronald Reagan in 1985 and pays farmers a yearly rental payment in exchange for the removal of environmentally sensitive land from agricultural production — and for planting environmentally friendly species. 

Landowners were previously required to repay all previous payments plus interest if terminating the contract, but the new policy waives that if the land is transferred to a beginning farmer or rancher through a sale or lease with an option to buy.

Agriculture deputy under secretary Lanon Baccam noted when making the announcement that the average age of principal farm operators in the US is 58, making succession, estate planning top priorities for the USDA.

“Access to land remains the biggest barrier for beginning farmers and ranchers,” he said. “This announcement is part of our efforts to address some of the challenges with transitioning land to beginning farmers… The technical teams at USDA will tell us which [land] can terminate from the program with little impact on the overall conservation efforts.”

With CRP enrollment close to the Congressionally-mandated cap of 24 million acres, the early termination will allow USDA to enroll other land with higher conservation value elsewhere, the government agency noted.

The land coming out of CRP will also have priority enrollment opportunities in other USDA conservation programs, including the CRP Grasslands and the Conservation Stewardship Program or Environmental Quality Incentives Program.

According to the Tenure, Ownership and Transition of Agricultural Land survey, conducted by USDA in 2014, US farmland owners expect to transfer 93 million acres to new ownership during 2015-2019, representing 10 percent of all farmland across the nation.