7.4 Farmland Preservation

A growing number of states across the nation are recognizing the importance of actively protecting farmland and supporting their agricultural industries and infrastructure. Many states are positioning themselves to lead the future bioeconomy by protecting working lands used for agriculture and forestry to provide biomass needed for fuel, electricity, chemicals, and other products. Protecting farmland assists states to develop a diverse agricultural economy through value-added products. Working lands also provide ecological services that promote environmental quality, sustain economic growth, and improve the quality of life by providing flood control, protection of streambanks, groundwater recharge, scenic vistas, wildlife habitat, and carbon sequestration. Absent a viable agricultural industry, irreplaceable farmlands cannot and will not be preserved for future generations of farmers. (NASDA believes) the Farmland Protection Program Program (FPP) must not exclusively focus on soils preservation, but must incorporate farm viability into its overall mission.

NASDA supports the recent enhancements of the FPP and recommends that improvements to the program in the 2008 Farm Bill, which include increased flexibility in the program and some deference to local and state conservation entities, be maintained and enhanced in the development of regulatory rules and guidance. In particular, 1) if a state run conservation easement program exists and that program can be considered to be a qualifying entity under the provisions of the Farm Bill, funds should be allocated to those state agencies for distribution to other qualifying local government entities and conservanies within the state; 2) conservation easement language developed by qualifying state programs should be considered as being acceptable to the federal government so that conservation easements can be tailored to the particular characteristics of the state; 3) recognize farm viability as a priority in addition to soils preservation in the FPP; and 4) ehance the effectiveness of the FPP by allowing state run conservation easement programs to distribute funds and complete locally initiated conservation easements in a reasonable fashion, and 5)recognize unique farmland orchards and vineyards.

Easements

NASDA supports the elimination of capital gains taxes on income received from the sale of agricultural conservation easements. Taxing agricultural conservation easement income discourages farmer participation, and increases the cost to states, counties, and private organizations which are trying to preserve farmland by purchasing development rights. Current tax policy also causes inequities between farm owners depending on their income level and the length of time they have owned their farms. In particular, farmers who have modest income, and who have owned their land for many years, are disadvantaged by existing tax policy as it relates to the sale of an agricultural conservation easement.

Eliminating capital gains taxes on agricultural conservation easements will allow state and local dollars to preserve more acres of farmland; encourage wider farmer participation in farmland preservation programs, and eliminate the need for complicated and costly programs which are designed to overcome the capital gains tax disincentive to farmland preservation.