[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
SUPPORTING THE NEXT GENERATION OF AGRICULTURAL BUSINESSES
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HEARING
BEFORE THE
SUBCOMMITTEE ON RURAL DEVELOPMENT, AGRICULTURE, TRADE, AND
ENTREPRENEURSHIP
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
JULY 25, 2019
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 116-039
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
37-114 WASHINGTON : 2019
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
JARED GOLDEN, Maine
ANDY KIM, New Jersey
JASON CROW, Colorado
SHARICE DAVIDS, Kansas
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
ANGIE CRAIG, Minnesota
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TRENT KELLY, Mississippi
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania
Adam Minehardt, Majority Staff Director
Melissa Jung, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Abby Finkenauer............................................. 1
Hon. Jim Hagedorn................................................ 3
WITNESSES
Mr. Matthew Keesling, Farm Manager, Bures' Organic Family Farm,
Deerbrook, WI, testifying on behalf of the Dairy Grazing
Apprenticeship................................................. 6
Mr. Jason Grimm, Owner, Grimm Family Farm, Williamsburg, IA,
testifying on behalf of the National Young Farmers Coalition
and the Eastern Iowa Young Farmers Coalition................... 8
Ms. Meri Lillia Mullins, Farm Manager, Lighthearted Ranch,
Longmont, CO, testifying on behalf of the Flatiron Young
Farmers Coalition.............................................. 10
Mr. Rodney Hebrink, President & CEO, Compeer Financial,
Lakeville, MN, testifying on behalf of Farm Credit............. 11
APPENDIX
Prepared Statements:
Mr. Matthew Keesling, Farm Manager, Bures' Organic Family
Farm, Deerbrook, WI, testifying on behalf of the Dairy
Grazing Apprenticeship..................................... 26
Mr. Jason Grimm, Owner, Grimm Family Farm, Williamsburg, IA,
testifying on behalf of the National Young Farmers
Coalition and the Eastern Iowa Young Farmers Coalition..... 28
Ms. Meri Lillia Mullins, Farm Manager, Lighthearted Ranch,
Longmont, CO, testifying on behalf of the Flatiron Young
Farmers Coalition.......................................... 34
Mr. Rodney Hebrink, President & CEO, Compeer Financial,
Lakeville, MN, testifying on behalf of Farm Credit......... 37
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Statement from Hon. John Joyce............................... 48
SUPPORTING THE NEXT GENERATION OF AGRICULTURAL BUSINESSES
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THURSDAY, JULY 25, 2019
House of Representatives,
Committee on Small Business,
Subcommittee on Rural Development, Agriculture,
Trade and Entrepreneurship,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:06 a.m., in
Room 2360, Rayburn House Office Building, Hon. Abby Finkenauer
[chairwoman of the Subcommittee] presiding.
Present: Representatives Finkenauer, Crow, Craig, Hagedorn,
and Chabot.
Chairwoman FINKENAUER. Good morning. The Subcommittee will
come to order.
I just first want to say thank you again to our witnesses
here today who took time to come to Washington to testify in
front of this Committee. You know, this is an issue that is
vitally important not only to my home State of Iowa but to
farming communities across the country. I greatly, greatly
appreciate you guys taking the time and really look forward to
everything we are going to hear today and all of your expertise
as well. So thank you again.
You know, having grown up in northeast Iowa, I know how
important agriculture is to our way of life in Iowa and that
farmers are quite literally the backbone of our economy. And,
you know, in Iowa, agriculture contributes to over $9 billion
annually to our State GDP and accounts for most of our top
exports.
In my congressional district, nearly 14,000 people are
farmers or work in agribusiness, while countless others, like
our manufacturers and small-business owners, rely on a strong
agricultural economy, like our UAW workers who make those John
Deere tractors in my district.
I am very excited about our hearing today on ways we can
support new and beginning farmers. See, I grew up in Sherrill,
a little bit north of Dubuque, where I represented in the State
house. It is a town with more cows than people, which I was
always--I am still very proud to say. You know, my parents
still live back there.
My friends grew up on their families' farms. In fact, when
I would spend the night at their house, it was a thing; it
wasn't even negotiated: You got up in the morning and you did
chores. And I still know how to make a mean bottle of milk
replacer to go feed the calves.
But, again, it was a way of life and still is that I am so
proud to have grown up around and been a part of. And it is
something that we have to make sure that we are protecting in
Iowa, not just for our economic security but also for who we
are and our values.
And, you know, I also think of my sister and her husband,
who are corn and soybean farmers. You know, they have 500 acres
and a 2-year-old and now--I think he is 4 weeks old, or he will
be on Saturday, a little guy at home. And I have heard
firsthand from them and folks across the district just how
tough things can be and are right now because of an ongoing
trade war that has been happening for over a year and a half.
And so there is a lot going on in the agricultural economy,
and we need to be making sure we are doing everything we can
here in Congress to hear from the folks on the ground living it
day to day and making sure that Iowans in my generation and the
generations after mine are able to live their dreams and take
over family farms and invest in new ones to start their own
dreams.
You know, again, our way of life continues to be at risk
given what we have seen in the past 20 years. Iowa has lost,
actually, over 10,000 farms, many of them small and medium-size
farms. It isn't just Iowa, though; this is happening across the
country.
The farming community is aging. The average age of the
American farmer is around 58 years old. And in Iowa, farmers
over the age of 75 have increased by 28 percent since 2012. To
ensure the continued success of American agriculture, we must
facilitate the transfer of skills, knowledge, and land between
this generation and the next one.
The problem continues, again, to be bigger than that.
Again, while farming has never been easy--you don't go into it
because it is easy--but the increasing cost of production, low
commodity prices, again, exacerbated by this ongoing trade war
coupled with unpredictable weather patterns, such as flooding
we have experienced this spring in Iowa, have made it difficult
for farmers like my friends that I grew up with in Sherrill and
folks all across my district.
And as I am sure we will hear from our witnesses today,
aspiring and beginning farmers are facing significant
challenges, and some of them are much different than some of
our parents' generations.
There are things we can do, though, and we should do to
step up with these new and beginning farmers to help success.
We should explore new ways to help farmers access the capital
they need to not only invest in the land and equipment but
offset some production costs when they are first starting out.
Another great way for young farmers to get started is with
infrastructure and livestock facilities. I am happy to be
working on legislation that would help beginning farmers access
capital for ag infrastructure.
We know that new and beginning farmers, like many
Americans, including myself, are also saddled on top of all
this with student loan debt. We should examine how that impacts
their choices and opportunities when it comes to starting a
career in agriculture.
We should also help these farmers access emerging markets
both at home and abroad. We also need a smart trade policy that
helps, not hurts, American agriculture.
As weather becomes, obviously, increasingly unpredictable,
like we saw with the floods in the spring, farmers also need
strong infrastructure from the Federal Government when it comes
to natural disasters.
The future of a rural economy truly depends on the next
generation. Just like our teachers, police officers, and small-
business owners, farmers are part of the fabric of our rural
communities. They make places like my hometown somewhere where
people can work hard, raise a family, and have a good life.
And I am so fortunate to work with my Ranking Member, Dr.
Joyce of Pennsylvania, on these issues day-in and day-out--and
I am happy Mr. Hagedorn is stepping in today for a few
seconds--which, I know, obviously, are equally important to
your district as well. I am glad that we share this priority
for supporting our farmers in our rural communities, and I look
forward to continuing our bipartisan work on this Subcommittee.
I want to, again, just thank the witnesses for being here
for what I hope will be a very productive discussion.
I would now like to yield to the Ranking Member, Mr.
Hagedorn, for his opening statement.
Mr. HAGEDORN. Madam Chair, appreciate that. Thanks for
holding this hearing. Wonderful to be with you today.
I say as someone who represents southern Minnesota, in the
First District, also serve on the Ag Committee, this is a
critical hearing. These are issues we really want to get to the
bottom of and talk about how you are helping out with our
generational farmers in the future, not just the ones that we
have had in the past, but building up farms and operations as
we move forward.
I would say that, you know, in the farm country, for the
last 5, 6 years, it has been tough. It hasn't been just since
the trade disputes or, if you want to say, the resetting of our
trade agreements. It has been tough. You know, regulations have
been driving up costs. ObamaCare has been a big cost for our
farmers. And things have--like energy. You know, farmers depend
on low-cost energy, and when you drive up the cost needlessly,
it makes it tough.
So sustaining agriculture, our rural way of life,
critically important. What you are going to talk about today
and what you are doing is a big part of that. And we appreciate
all the witnesses for being here.
You know, communities in my district and across the country
rely on the 2.2 million farms in the United States. And of
these, 88 percent are small. They are not all big operators out
there. Only 20 percent are operated by new and beginning
farmers, however, and ranchers. So that is what we are talking
about today and why we need to explore these areas and see how
we can continue along that path.
One U.S. farm will feed about 165 people annually. And when
you think about the wonder of agriculture, agribusinesses we
have today, you know, people know, the next day, when they walk
into that grocery store, those shelves are going to be stocked
with an array of choices at affordable prices. It is really one
of the great wonders of all the world as to how this works each
and every day. It isn't like that in every country. There is
one down in South America where the people have lost 25 pounds,
on average, because there is no food in the grocery stores.
And I tell folks that we have to keep our farmers moving
forward, because you can have a pocketful of hundred-dollar
bills or EBT cards or the things that we do to make sure that
people have an opportunity to feed their families, but if there
is no food on the shelves, we are in a lot of trouble. So we
appreciate our farmers and what you are doing in that regard.
You know, with a projected global population of 9.7 billion
by the year 2050, the world's farmers will need to grow
approximately 70 percent more food in order to feed the world.
And our farmers do feed much of the world. We export a lot, and
we need to export more. And I think that is what we are all
working toward.
In the State of Pennsylvania, which Dr. Joyce represents,
over 6,100 farms have been lost in the last 5 years. And we
want to make sure we keep those generational farms in business,
because when they sell out to bigger operators--and bigger
operators are not bad folks--it means fewer people holding the
land, working the land, living in our small communities, going
to our schools, shopping on Main Street at our small
businesses. And we need to make sure that we don't put undue
pressure on our small, rural communities. We want them to grow
and thrive.
And so, with that, today's witnesses will discuss their
experiences in the farm industry and give us some insight into
what programs work best for new and beginning farmers and
ranchers.
I look forward to your testimony.
And, with that, Madam Chair, I yield back. Thank you.
Chairwoman FINKENAUER. Thank you, Mr. Hagedorn.
The gentleman yields back.
And if Subcommittee members have an opening statement
prepared, we would ask that they be submitted for the record.
I would now just like to take a minute to explain the
timing rules. Each witness gets 5 minutes to testify, and the
members get 5 minutes for questioning.
There is a lighting system right there in front of you to
help you out. The green light will be on when you begin, and
then the yellow light comes on when you have 1 minute
remaining. The red light comes on when you are out of time. And
we ask that you stay within the timeframe to the best of your
ability.
I would now like to introduce our witnesses.
Our first witness is Mr. Matthew Keesling, the farm manager
at Bures' Organic Family Farm in Deerbrook, Wisconsin. Mr.
Keesling served in the United States Army for 24 years as an
enlisted soldier and an officer, including three tours in Iraq
and two in Afghanistan. He retired as a major in 2017.
Mr. Keesling earned a bachelor's of science degree from
Kansas State University and an MPA from Webster University. He
is currently an apprentice with the federally recognized Dairy
Grazing Apprenticeship and is also the veterans liaison for the
program, where he works to aid his fellow veterans entering
agriculture.
Mr. Keesling is active in his local 4-H and is looking
forward to purchasing the farm that he has apprenticed for the
past 2 years.
Welcome, Mr. Keesling.
Our next witness is Mr. Jason Grimm, a third-generation
Iowa farmer from my congressional district. He started his farm
enterprise in 2011, where he raises dry beans, poultry, and
produce on his farm near Williamsburg, Iowa.
Mr. Grimm earned degrees in landscape architecture and
environmental studies from Iowa State University.
In addition to farming, Mr. Grimm is the deputy director at
Iowa Valley Resource Conservation and Development in Amana, one
of the most beautiful towns, actually, in the First District.
He is also a leader in Iowa's local and regional food
systems. Mr. Grimm has more than a decade of experience in
community food systems. He cultivates local and statewide
networks and coordinates farm-to-business supply chains. He has
led more than 20 workshops, sharing his knowledge with over 250
beginning farmers.
Mr. Grimm has developed a statewide Iowa Farm to School
Toolkit and acts as a value chain coordinator, connecting
producers to each other, to viable markets, and institutions,
and cultivates relationships within the food system.
Thank you for all that you do, and welcome, Mr. Grimm.
Thank you for being here.
Our third witness is Ms. Meri Lillia Mullins. Ms. Mullins
is the farm manager at Lighthearted Ranch in Longmont,
Colorado. Ms. Mullins works on rangeland management, animal
husbandry, and herd management.
In addition to working as a farm manager, she is also an
engineer, working on public safety and road maintenance.
Welcome, Ms. Mullins. We are very, very happy to have you
here.
I now yield to the Ranking Member, Mr. Hagedorn, to
introduce our final witness today.
Mr. HAGEDORN. Well, thank you, Madam Chair.
Our final witness is Rod Hebrink, president and CEO of
Compeer Financial, a proud member of the Farm Credit System.
Mr. Hebrink is responsible for leading the Compeer Financial
team in providing loans, leases, risk management, and other
financial services to farmers and rural communities, including
Blue Earth, Minnesota, my hometown, where you have an office.
Under Mr. Hebrink's leadership, Compeer has provided a
spotlight for young farmers through their Groundbreaker of the
Year award recognizing standout small-operation farmers. And,
furthermore, through a company commitment to rural America, his
team has assisted in administering millions of dollars in
grants to upgrade county fair facilities, emergency response
equipment, scholarships to high school seniors, and to support
local 4-H and FFA groups. And they were just in our office this
week. I can tell you how important that is.
Mr. Hebrink holds a bachelor's degree in agricultural
business administration from the University of Minnesota and a
graduate degree from the University of Wisconsin-Madison
Graduate School of Banking. Mr. Hebrink recently testified
before the House Appropriations Subcommittee on Agriculture.
And thank you for coming back to D.C., Mr. Hebrink. We are
looking forward to hearing about your clients' stories and
looking forward to your testimony.
Thank you. I yield back.
Chairwoman FINKENAUER. Thank you, Mr. Hagedorn.
Mr. Keesling, you are now recognized for 5 minutes.
STATEMENTS OF MATTHEW KEESLING, FARM MANAGER, BURES' ORGANIC
FAMILY FARM, DEERBROOK, WISCONSIN, ON BEHALF OF THE DAIRY
GRAZING APPRENTICESHIP; JASON GRIMM, OWNER, GRIMM FAMILY FARM,
WILLIAMSBURG, IOWA, ON BEHALF OF THE NATIONAL YOUNG FARMERS
COALITION AND THE EASTERN IOWA YOUNG FARMERS COALITION; MERI
LILLIA MULLINS, FARM MANAGER, LIGHTHEARTED RANCH, LONGMONT,
COLORADO, ON BEHALF OF THE FLATIRON YOUNG FARMERS COALITION;
AND RODNEY HEBRINK, PRESIDENT AND CEO, COMPEER FINANCIAL,
LAKEVILLE, MINNESOTA
STATEMENT OF MATTHEW KEESLING
Mr. KEESLING. Thank you, and good morning.
A little bit about the Dairy Grazing Apprenticeship. Thank
you for the introduction. DGA is in 12 States, with 180
approved master dairy grazers. Forty-five of those are paired
with apprentices. We have 30 journey grazers, who are graduates
of the program, and over 100 apprentice candidates that are
looking for the right opportunity to enter the dairy industry.
Personally, on the farm, we are members of a cooperative,
Organic Valley, and we are set to purchase the farm within the
next year. The farm has been with Organic Valley since 2005,
and the value added from this co-op has been one key reason for
the farm's success and survival.
I would like to thank the members for holding such a
hearing and gathering information to help shape programs and
legislation for the next generation of farmers.
There are three things I would like to bring to the
members' attention that I have had experience with as I have
worked towards being a businessowner and dairyman, and those
are: Federal programs that I have attempted to use and the
outcomes of those, with a focus on the Farm Service Agency
within the USDA; education and training offered for dairy and
agriculture versus what is actually needed; and, finally, the
concept and importance of community-based agriculture and
mentorship for anyone entering the agriculture industry.
In 2012, as I became eligible for retirement from the Army,
I visited with the FSA in Emporia, Kansas, to discuss financing
in order to start a dairy from scratch. Over the previous 4
years, we had purchased the land and some necessary equipment;
discussed necessary permits with local and county agencies;
selected our herd, freestall, and parlor design; and secured a
feed source and milk processor.
I worked with three local dairymen that were close to
retirement through this process and spent numerous hours on
their farms learning the finer points of being a dairyman. I
worked with Small Business Administration and SCORE to develop
and finalize my business plan even though the mentor was not in
agriculture.
That day in Emporia, I was told that even though I had
taken these steps and the business plan was solid, I did not
have enough education in agriculture. I took this information,
stayed in the Army instead of retiring, and started to look for
ways to meet the education requirements that lenders were
asking.
In 2017, I finally retired and I had entered into the Dairy
Grazing Apprenticeship program and relocated to Wisconsin.
Where better to learn to dairy than the dairy State itself?
Early on, I visited with the FSA office in Wausau,
Wisconsin, to ensure that I was on the right path to buy an
existing dairy farm. Again, I was met with resistance and
informed that, even after graduation from the DGA, I would not
have met the requirement for experience. I would need another 3
years of managing or owning/operating a dairy to qualify for a
beginning farmer loan.
With all the areas and/or categories that I thought I had
qualifications in--veteran status, being a beginning farmer,
years of management experience in the military, and education
from both a university and through an apprenticeship program--
nothing translated to agriculture and dairy, so I would have to
go find a job and work in a management position for 3 years
before I could be seen as an acceptable risk to the FSA.
Existing Federal support programs brief well, but they are
far from where I believe they were intended to be. There is a
need to provide clearer guidance to Federal program offices if
this is truly the case.
I would like to go back to 2012 now and share some of the
searching that I did to try to meet the education requirements.
I already had education and management. I was still on Active
Duty, so I was trying to provide knowledge and gain knowledge
while I met my military obligation.
Even though there were several online programs, there were
none that matched the experience piece. Dairy Grazing
Apprenticeship was the only real option to gain both while not
postponing desire to own and operate for another 3 to 5 years.
Along this path, I learned that mentorship is critical when
entering a new industry. The Beginning Farmer and Rancher
Development Program has been there since we started DGA, and
maybe their focus could be on supporting the trainer as well as
the trainee. SBA and SCORE were not able to support
agricultural businesses. They were more into tech, retail, and
consulting, and one size does not fit all. DGA has since found
mentors and enlisted them to be prepared to train the next
generation of farmer. With the new dairy concept through DGA,
we have the potential to mimic this nationwide.
As you are all aware, there are always needs for a
beginning dairy farmer, and they are: access to capital, access
to a market, and a network of community of dairy farms to learn
and grow.
In closing, I would ask that you all invest in a model that
is proven to work--apprenticeships. Protect the grants that are
currently available, and allocate them to better serve
nonprofits. Universities study, but apprenticeships do. Allow
incentives for trainers and mentors as they grow the next
generation of farmers. Limit vertical integration of the dairy
industry and regulate to protect the ``ag of the middle'' to
ensure that the next generation at least has an opportunity to
enter this fine example of being a true entrepreneur.
Thank you for your time and listening to my testimony
today. Go Packers.
Chairwoman FINKENAUER. Go Pack go. Absolutely. Yes. I grew
up in Sherrill, close to Dubuque, obviously, where you are
either a Packers fan or a Bears fan. And I, luckily, grew up a
Packers fan. So I am going to tick off half the people in my
district by just saying that, but forgive me.
Anyway, thank you, Mr. Keesling.
And, Mr. Grimm, you are now recognized for 5 minutes.
STATEMENT OF JASON GRIMM
Mr. GRIMM. Good morning, Committee and staff. Thank you for
this opportunity to share my experiences as a young farmer.
Congresswoman Finkenauer, thank you for inviting me,
specifically, to represent the First District as well.
My name is Jason Grimm. I am 33 years old. I am a beginning
farmer from Williamsburg, Iowa. I began farming 8 years ago and
started with a specialty crop of black beans, very unique to
Iowa, on my family's cow and calf operation.
In addition to farming, I am cofounder and treasurer for
the Eastern Iowa Young Farmers Coalition and a member of the
National Young Farmers Coalition, Practical Farmers of Iowa,
and Iowa Farm Bureau.
However, I also work full-time off the farm as deputy
director of Iowa Valley RC&D, a nonprofit located in Amana,
where I have worked for 10 years. I started the organization's
Regional Food Initiative in 2009 to address systematic change
in Iowa's food system.
My farm, Grimm Family Farm, is a small farm business that I
started in 2011 with the help of my wife and family. My two
young boys, Emmet, age 2, and Elliot, age 6, are already
incorporated into the farm. Elliot loves to feed the chickens,
and Emmet loves to go to tractor rides with his grandpa. Soon,
they will be big enough to open gates to our farm fields while
riding along on the tractor, like I did, during harvest.
I started my farm business because I love the challenge of
agriculture, I enjoy being outdoors, and I have an
entrepreneurial spirit. I also believe that farming can
strengthen community, and farming is a tradition in my family.
Continuing that tradition, I began renting a few acres of
my family's land in 2011 to raise pastured poultry and grow dry
beans, potatoes, and produce. When I first began farming, I
sold primarily to family and friends. Today, I sell these crops
throughout eastern Iowa to grocery stores, restaurants,
caterers, school districts, and colleges.
Now in my eighth growing season, like so many other young
farmers across the country, I found myself limited by the
instability of growing a business on leased land without an
opportunity to build infrastructure and earn equity through
ownership. Federal programs like the Beginning Farmer and
Rancher Development Program, the Farm Service Agency's
microloan program, and the Farm to School Grant Program have
helped me grow my business and access new markets.
My customer list grows every year, and my need to increase
production of my crops has led me to pursue purchasing some of
my family's land or relocating my family to purchase land
nearby. Owning rather than renting would enable me to build a
facility to properly store and operate the equipment needed to
clean and bag my dry beans. Such a facility could help me
expand my production capacity to grow my business to support a
career full-time on the farm.
In 2013, I approached my grandparents about buying a tract
of their land but hit a roadblock. My grandparents, now in
their mid-80s, are hesitant to sell the land because of
financial advice warning them about high capital gains taxes.
As a third generation, I did not expect access to be so
difficult. I thought I just needed a viable business plan and
everyone would be happy to have the land stay in our family. I
thought I had the best-case scenario.
In the last couple years, discouraged with the set of
circumstances that my grandparents face, I have turned my
attention to other land that may be nearby my home. I have
approached landowners, but many of these landowners do not want
to go through a multiyear process of transitioning land to a
beginning farmer. When landowners do want to sell to a
beginning farmer, the cost of land is out of reach for my farm
business, especially considering my monthly student loan debt.
I believe that, had I been able to purchase part of my
family's farm 6 years ago or any year since, my business would
be a lot different today. I would have grown my line of dry
beans to include three varieties. I could be contracting other
farmers to grow beans from me. Today, I market my beans from
Iowa City to Omaha, but with access to more land, I would
probably be selling to the larger Midwest market and possibly
even have two value-added products.
Recently, I connected with one landowner about an hour away
from my family. She has been operating her farm for 25 years.
We have discussed transitioning the land, but selling outright
would be challenging for her, as well, because of the taxes
incurred through the sale.
Also, my wife and I are unsure we want to relocate to
another community. The school district our oldest son attends
is the same one that I grew up in, and many of our family and
friends attend that school as well. Plus, our church community
is located in our hometown.
I urge you to explore creative solutions to this land
transition challenge. Examples include State tax provisions for
land sold or rented to beginning and socially disadvantaged
farmers or a tax break related to capital gains taxes incurred
on farmland sold to beginning farmers and socially
disadvantaged producers. These tax incentives would help level
the field for us when we are purchasing land and give us more
negotiating power as well.
America needs more young farmers. I hope that farming can
be an option for young people now and into the future. Thank
you again for this opportunity and the opportunity to represent
Iowa beginning farmers. I look forward to your questions and
continuing the discussion.
Chairwoman FINKENAUER. Thank you, Mr. Grimm. And I thought
you were going to end saying, ``Go Cyclones.'' ISU, their
mascot is the Cyclones. But that is really contentious in the
area that you live in, though.
Mr. GRIMM. Yeah, it is pretty tough.
Chairwoman FINKENAUER. I was going to say, so close to Iowa
City and the Hawkeyes. But thank you again, Mr. Grimm. I
appreciate you being here.
And I would now like to recognize Ms. Mullins for 5
minutes. Thank you.
STATEMENT OF MERI LILLIA MULLINS
Ms. MULLINS. First, thank you, Chairwoman and Ranking
Member and other members of the Subcommittee, for this
invitation to testify here today. Thank you for holding this
hearing and for the opportunity to provide a perspective on the
challenges and opportunities that we face in the next
generation of farmers and ranchers. This work is extremely
critical, and I really, really appreciate the opportunity to be
here.
My name is Meri Lillia Mullins. I am a first-generation
farmer in Longmont, Colorado. In exchange for room and board, I
manage a 42-acre farm, where I raise goats, chickens,
honeybees, and grow vegetables.
In addition to farming, I also work full-time off-farm, and
I volunteer for a local nonprofit, Mad Agriculture, who works
with farmers to restore soil health through farm planning and
policy work. I am also a member of our local chapter of the
Flatirons Young Farmers Coalition and the National Young
Farmers Coalition, where I participate in local policy work and
regular education events.
I have a great desire to make farming my life's work, which
started with my passion for reconnecting urban communities to
food while I was in college.
I have a bachelor's degree in chemical and environmental
engineering from the University of Toledo. I decided farming
was the most meaningful way that I could use my technical
degree. I began seeking farm labor opportunities to gain more
hands-on experience in agriculture.
I quickly realized farming was not as romantic as it
seemed. In many cases, farm internships in my area included a
$400-a-month stipend with no health insurance. I simply could
not afford to learn how to farm while covering my living
expenses and paying down my student debt. The cost of farmland
and the availability of financing is well out of reach for
anyone with student loans.
Farming full-time was no longer a possibility for me, which
led me to working full-time for a manufacturing company and
managing the ranch. While this is a wonderful learning
opportunity, managing the ranch full-time while working full-
time really takes its toll. And the sad truth is, I am not
unique in working and farming to make ends meet. Over 60
percent of U.S. farmers have off-farm incomes.
Unfortunately, due to student debt, I am unable to farm
full-time. I need my current day job to pay my $500-a-month
student loan payment along with other living expenses. My
current workload managing a farm and working full-time is just
not sustainable long-term. I spend many evenings and weekends
working on the farm and keeping up with things on top of my
full-time job.
I am faced with a few options. I am currently facing
burnout from working in farming full-time. I could farm full-
time and forego any health insurance and retirement planning
while incurring more interest on my loans. I could incur
massive debt on top of my student loans by purchasing my own
farm to attempt to defy all odds in making a living farming for
myself while paying off my debt. Or I could quit farming
altogether, just keep my day job. And none of these are viable
options that lead to a successful career and long-term career
in agriculture.
Without any financial cushion or inheritance, the chances
of me quitting my engineering job to pursue farming full-time
at this point are pretty slim. And that really deeply saddens
me.
While the barriers to entry into a agricultural career are
high for the next farmers in the new generation, one way that
you all can support beginning farmers is through student loan
forgiveness. My student loan debt is currently my largest
obstacle in my pursuit of farming. This is the reality for many
talented, passionate, young individuals across the country.
And there is not a shortage of young people that want to
farm in this country. Without congressional support, our aging,
rural farm community is at risk of losing these gifted young
farmers to other industries.
We need to ensure that we have a strong population of young
and beginning farmers in this country. They feed our
communities and are stewards of our land. Currently, the
average age of a farmer in Colorado and nationally is
approaching 60, and only 6 percent of farmers are under 35.
Those numbers are pretty scary to me.
Farmers provide a valuable public service. Agriculture
meets one of our most basic needs: They produce food for our
families and our communities. They also steward our land--
nearly 1 billion acres under agricultural cultivation in the
U.S., which is half of the land in the United States; provide
valuable ecosystem services; and protect natural resources.
Lastly, we support rural communities and economies, providing
jobs and income that have helped these communities weather
population decline and the Great Recession.
As the Nation faces a crisis of attrition within the
agricultural sector, it is essential that we help the new
generation of growers succeed. I urge you and I hope that you
can do everything in your power to support the next generation
of farmers by addressing student loan debt and land access for
farmers such as myself.
Thank you again so much for the opportunity to be here, and
I look forward to your questions.
Chairwoman FINKENAUER. Thank you, Ms. Mullins. I appreciate
you being here and for your insight.
And I would now like to recognize Mr. Hebrink for 5
minutes.
STATEMENT OF RODNEY HEBRINK
Mr. HEBRINK. Good morning, Chairwoman Finkenauer and
members of the Committee. My name is Rod Hebrink, and I am the
president and CEO of Compeer Financial.
Compeer is a proud member of the Farm Credit System. We
provide financing, risk management, and financial services to
farmers in rural communities in Illinois, Minnesota, and
Wisconsin.
Compeer is a cooperative owned by our customers and focused
on championing the hopes and dreams of rural America. Our
mission connects us with thousands of farmers who are
passionate about agriculture and determined to pursue their
dreams of exploring niche agriculture, launching
entrepreneurial businesses, or entering the industry for the
first time.
We appreciate the Committee's focus on young, beginning,
and small farmers. These farmers are an important part of our
mission in support of agriculture and rural communities.
Seventy-two percent of Compeer's loans are with young,
beginning, and small farmers, who we call YBS farmers.
Like all other Farm Credit System lenders, Compeer offers
special programs to meet the needs of YBS farmers. From
educational programs to special underwriting criteria, to
discounted rates, we work hard to find creative ways to get
farmers started and to ultimately succeed.
For example, Living Greens Farm in Faribault, Minnesota,
grows fresh greens and herbs aeroponically in a controlled
environment. Aeroponics is revolutionary. There are no
pesticides and no soil, just a nourishing mist spritzed on the
roots of plants.
Dana Anderson launched Living Greens Farm in 2012 after
working out of his garage for 3 years. Dana struggled to find
capital because he was looking for cash-flow-based financing
versus asset-backed lending. SBA and USDA programs were not
viable options due to the cost of accessing the programs and
his limited collateral. Fortunately, Compeer helped him to find
equity capital to move forward, but, unfortunately, equity
capital is much more expensive.
Today, Living Greens Farms employs 30 people, marketing
their produce to local retailers. They are profitable and
completed their first expansion last October.
Matthew Wayrynen is a beginning farmer who expanded his
business despite challenges obtaining financing. The 37-year-
old logger and beef farmer lives in McGregor, Minnesota, with
his wife and 2-year-old son. They have a 100-acre farm with 40
head of cattle and rent another 200 acres for hay. Matt is an
entrepreneurial-minded fourth-generation farmer and third-
generation logger.
Logging is Matt's main source of revenue. Two years ago,
Matt switched from conventional tree-length logging to cut-to-
length logging. Logging is a capital-intensive industry, and
Matt needed to make a new $250,000 capital investment. He would
have been a perfect candidate for the 7(a) SBA program,
benefiting from the lower interest rate that comes with the
guarantee. However, the high fees offset the program's intended
benefits. Compeer provided a traditional loan without a
guarantee from either SBA or USDA. An interest-rate reduction
was not available for Matt at a critical stage of growing his
business.
Reginaldo Haslett-Marroquin operates a 40-acre experimental
research and training farm in Northfield, Minnesota. Last year,
Reginaldo and three local farmers started Regeneration Farms
with $100,000 of their own equity and an operating loan from
Compeer. Regeneration Farms initially applied for a loan
through SBA, but they didn't qualify because they were
considered a startup with no financial history and insufficient
collateral.
In 2018, Regeneration Farms contracted with producers to
raise chickens that they sell under their Tree-Range brand. One
year later, they are expanding because of an opportunity to
produce, freeze, and ship chickens to the West Coast. To meet
this demand, they worked with Compeer for another operating
loan. While this works for now, their business is challenged
with limited options for affordable financing to expand and to
create the brand awareness that they need to grow.
I have shared some of the obstacles with the SBA loan
guarantee programs. I hope these stories shed light on the
challenges young and beginning farmers face. We also have
customers who have benefited greatly from the SBA programs, and
we are asking you to address some of the barriers: high fees,
difficult requirements, and time-consuming processes.
Thank you for the opportunity to testify, and I look
forward to your questions.
Chairwoman FINKENAUER. Thank you, Mr. Hebrink. I really
appreciate, again, you being here as well.
And now we are going to start the question portion of this.
And with that, I am going to recognize myself for 5 minutes.
Mr. Grimm, I would just like to start with you. You grew up
in a farm family. You have had the incredible opportunity to
work closely with your father and your grandfather. With their
land and equipment, you were able to start a very successful
operation that you run today. You have now been a farmer for 8
years and become a leader in our State when it comes to local
and regional food systems. Thank you, by the way.
However, you mention that, you know, you weren't always
interested in farming. And, you know, what advice do you have
for young people from farm families and communities like yours
who actually maybe are not considering a career in farming
right now, especially given everything that we are seeing with
the ongoing trade war and the weather patterns, you name it? Do
you have any advice for those that are either on the fence or
not sure if they want to go into it?
Mr. GRIMM. Well, farming, just like other industries, is a
business. So I took farming, to me, as an entrepreneurial
opportunity and looked at what are opportunities to grow and
produce new crops and things for in Iowa.
So I feel like the biggest opportunity for younger
generations to come back to their family farms is through
diversification, whether that is making value-added products on
a dairy farm to raising new crops like small grains for wheat
and flour products.
So my advice to other farmers that are unsure if they want
to come back to their family farm is to spend time to
understand other types of agriculture than what we have in Iowa
and find a niche for your family farm so you can diversify and
add new revenue streams for your farm and family's business.
Chairwoman FINKENAUER. Thank you.
And I know both Mr. Grimm and Ms. Mullins, you guys both
mentioned student loan debt. And as someone who also has
student loan debt--and I grew up, you know, in a State where I
am a first-generation college graduate--there are a lot of
folks, actually, in the First District who fall under that.
And, you know, it wasn't always easy, and that is fine.
But at the same time, you know, I have been watching sort
of what has been happening across our country, especially in
Iowa or in places with lower populations, where we keep
continuing to lose populations, not keep the next generation,
and have been starting to have discussions about how do we
address some of that. And whether that is when we are looking
at student loan debt and helping folks with that, how do we
incentivize folks to move to areas that need population or in
areas that we need more folks, you know, practicing in certain
areas like farming.
Would you be able to talk, Mr. Grimm, just how important
something like that would be to you, in particular, or to the
friends that you know, to get them to either stay in Iowa or
move back home?
And then I would like to hear Ms. Mullins' take on it as
well.
Mr. GRIMM. Well, I have paid off almost $30,000 of my
student loans. Still have more than $10,000 to go.
Chairwoman FINKENAUER. Yep.
Mr. GRIMM. But a smaller payment each month or no payment
at all would allow me to invest in land and a mortgage or more
equipment capital loans as well.
It would also just, I think, give an opportunity for
students to want to go into agriculture or to go into actual
production agriculture, not work in an agribusiness place where
the salaries and stuff are much higher than on the farm. Sadly,
we as the farmers usually take the price and don't set the
price.
Chairwoman FINKENAUER. Yeah.
Mr. GRIMM. So if I would have really taken the career path
that I thought I was going to do after high school, I would
have been earning twice the income that I am today. But I
wanted to stay in Iowa, and I wanted to be close to family.
Chairwoman FINKENAUER. I hear that. I know a lot of folks
feel the same way in the First District, and we have to do more
to bring more folks back home.
Ms. Mullins, would you like to touch on that?
Ms. MULLINS. Yeah, sure. I will just add, too, I am from
rural Michigan, so----
Chairwoman FINKENAUER. Yep.
Ms. MULLINS.--a lot of the same stuff going on there.
Chairwoman FINKENAUER. You get it.
Ms. MULLINS. Yeah, I think that, you know, the biggest
challenge that we face with student loans--me, personally, I am
a first-generation farmer. I don't come from a family of
farmers that I could learn from generations and generations, so
I am in learning phase. And to try to learn to farm and to have
farm internships and apprenticeships that pay little to nothing
and try to get into farming with my student loan debt is
literally impossible without, like, my loans going under.
So just having incentives and education, I think, is what
is really important to me and just supporting those programs.
Having loan forgiveness so that I could actually pursue
learning farming before I were to purchase my own farm, which
is what I would really like to do, would be really helpful.
Chairwoman FINKENAUER. Yeah. Well, thank you, Ms. Mullins
and Mr. Grimm.
And thank you all again for being here.
With that, my time has expired, so I would like to
recognize Mr. Hagedorn for 5 minutes for questions.
Mr. HAGEDORN. Thank you, Madam Chair. I appreciate that.
And I would acknowledge our Ranking Member, Mr. Chabot,
here today.
Steve, do you need to--you are okay?
Chairwoman FINKENAUER. Oh, there he is. He snuck in on me.
Mr. HAGEDORN. Very good. Yeah.
Great to have you, Steve.
And thank you for your testimony. Really appreciate it.
Mr. Keesling, appreciate your service to the country, what
you have done for our country. I am sorry that right now the
bureaucracy doesn't quite understand some common sense in these
areas. I think if you look back after World War II, Korean War,
many of our soldiers came back and they were the ones that
became the farmers that are the generational farmers today with
their families. And so I sure hope we can do what we have to do
in order to make sure folks like you can get into the business
and we can support you any way possible. So, again, thank you.
Mr. Hebrink, I have toured that facility in Faribault, the
Living Green Farms. It is quite fascinating. What made you get
involved in that? And what are some of the benefits, long-term,
for the country of that type of farming, just off the top of
your head? I am curious.
Mr. HEBRINK. Well, Compeer and other members of the Farm
Credit System, we support agriculture of all types, and whether
it is young, beginning farmers and entering into
entrepreneurial niches. Living Greens Farms is a good example
of that, both a young producer but also a producer with a new
approach to agriculture.
We are seeing a lot of investment in urban agriculture, and
in locally grown agriculture. Living Greens Farms meets both of
those criteria. It is a new approach to agriculture, one that
is sustainable and one that I think many consumers are
interested in seeing thrive.
Mr. HAGEDORN. Yeah. You save on the transportation
expenses; you have a freshness quality that lasts a little bit
longer in the local stores. So I think that is wonderful.
One of the things that I think your group at Compeer and
some of the others in the farm credit industry probably don't
get enough credit for is that you are out there making loans
and helping the communities with projects that are very
critical. It could be healthcare-related projects. It could be
things, like you said, with the county fairs and all that.
But you look at these other areas, with the broadband and
the infrastructure that we need in order to make sure that we
have quality living for folks, and we want to have people in
the rural areas. Do you have some other examples of those types
of projects that you have been working on?
Mr. HEBRINK. Well, yes. And thank you for the question,
because we do see a strong connection between the health of
agriculture and the health of rural communities. Each of the
other witnesses today have talked about their roles in coming
back to the farm and building their local communities, but you
have to have a community that offers other options and interest
to attract people to come back to the community.
We have been providing financing for things like critical
access care facilities, rural hospitals, and nursing homes that
help provide the necessary services for all of the rural
communities, whether it is farmers directly involved in
agriculture or other citizens of those rural communities.
You mentioned broadband, which is one of those areas that
is really lagging in rural communities and is one of those core
utilities, like electricity was in the 1930s and 1940s, that
needs to be built out in rural communities to continue to
attract businesses.
The Farm Credit System has some authorities in building
local infrastructure, in telecommunications, in water and sewer
systems, and we look forward to those public-private
partnerships. Compeer has worked closely with the USDA programs
in public-private partnerships, working with community banks to
invest in the healthcare facilities. Those are some of the
examples that the Farm Credit System can bring capital from
outside rural communities and reinvest in rural communities.
Mr. HAGEDORN. I am glad to hear that you are working so
cooperatively with the community banks and others in these
rural areas, and it sounds like a win-win-win-win-win. That
sounds good for our rural folks.
You know, I had the luxury of growing up on a family farm
in southern Minnesota, and my father and grandfather, great-
grandfather, all southern Minnesota farmers. We had hogs and
grain. And, you know, it was a wonderful experience.
It is not for everybody, but those people that--especially
when they grow up on a farm, we want them to continue along,
but the people in the cities that have that dream, and others,
do everything possible in order to give them an opportunity to
go out there and be part of this system of agriculture. It is
high-risk. It is high-capital. It is not always high-reward. It
is hard work.
And I wish you well. And I hope you are able to get in the
industry. I appreciate all you are doing to help our farmers in
our rural communities.
With that, I will yield back.
Chairwoman FINKENAUER. Thank you, Mr. Hagedorn.
And, with that, I would like yield to Rep. Jason Crow,
Chairman of the Subcommittee on Innovation and Workforce
Development.
You are recognized for 5 minutes.
Mr. CROW. Thank you, Madam Chair.
And thank you to all of you for being here.
Mr. Hebrink, I appreciate your reference to Berry Patch
Farms earlier, in my district. My kids have actually been on
numerous field trips out there, and it is a wonderful place.
Ms. Mullins, thank you for representing the 40,000 farmers
of Colorado and for sticking with it, because it is a very
noble pursuit. And I hope you continue to stick with it.
I wanted to begin with Mr. Keesling. I am a fellow veteran,
and I am particularly interested in the intersection of
veterans issues and small business and agriculture. And as my
colleague Mr. Hagedorn pointed out, you know, there is a long
history in America of our veterans going into agriculture and
farming, and I appreciate you continuing that tradition.
And I would like to know what more we can do to help
integrate the efforts of the V.A., some of the benefits that
you might have received through the V.A., with the SBA? Because
I know oftentimes things get siloed in this town, in
Washington, and the left hand doesn't know what the right hand
is doing. And if there are opportunities to better integrate
the veterans benefits that you may have availed yourself of
with some SBA or USDA resources--and, basically, what more we
can do to make that more efficient for you.
Mr. KEESLING. Thank you. That could be a very difficult
question, so I will keep it simple and state that most veterans
coming back will have some sort of educational benefit, and
through SBA and SCORE, there are educational opportunities that
they won't be able to use those benefits to attain.
So, similarly to Dairy Grazing Apprenticeship, where we are
considered on-the-job training, so as I go through this program
it doesn't allow to pay for the tuition, my GI Bill can't cover
the tuition for the related instruction, as well as the housing
stipend that I receive decreased every 6 months that I was in
the program.
So everything that I had as a veteran to maximize would be
to go to a regular university, go to a job. It did not bring me
to agriculture at all, and it didn't bring me into being a
business owner at all, because any of those educational
opportunities that are offered were not covered through my
educational benefits.
So that would be the biggest thing that I hope you leave
here with, is that GI Bill needs to be applicable to anything
that gets, you know, a veteran starting a business and joining
the agriculture industry.
Mr. CROW. As a followup to that--and this would be a
question for the other panelists today here as well. You know,
in the work I have done in the veterans space after leaving the
service, before becoming a Member of Congress, you know, we
found that working in greenhouses, working in agriculture,
working outdoors actually has a tremendous benefit in
addressing PTS and other ailments with our veterans. And there
are a number of nonprofits that focus on that. And I also know
that workforce development, finding qualified workers, is a
real challenge in agriculture.
So thinking about, you know, solving two problems at once,
are there opportunities, tax incentives or otherwise, that
would help you all connect with veterans that are interested in
getting involved, working for you, with you, in the industry?
Mr. HEBRINK. Well, you are absolutely right, Congressman,
that labor is a critical issue for agriculture, and there are
shortages of labor to support lots of different types of
agricultural production.
And so, yes, if there are training programs for veterans
and tax incentives for producers who would hire veterans to
help bring them back into the labor pool for rural communities,
I think that would be advantageous to our farmers.
Mr. CROW. Mr. Grimm, is that something that----
Mr. GRIMM. I was just----
Mr. CROW.--your farm would----
Mr. GRIMM. I was just going to comment. I think it would be
important to look at programs--I think the Young Farmers
Coalition in Colorado helped to pass legislation that actually
helps pay the trainer for their time to train, in this case,
the veteran that is coming back to agriculture. Because it
takes a lot of time for us out of our farm business to also
train the next generation. So any way to support those farmers
that are the trainers, in that case, to help them train the new
farmers.
Mr. CROW. That is a good idea.
Ms. Mullins, do you have any thoughts on that?
Ms. MULLINS. Just something quick to add in support of
that. We have a veterans group that works locally that is
trained by other folks and is a contract group of veterans that
travels frequently to different farms in our area that we have
worked really closely with.
So I know that there are programs that are there and that
they are really beneficial and other farms, like the farms in
my area, are using them. So it is a good thing to continue
supporting.
Mr. CROW. Thank you. That was very helpful.
And thank you for all your testimony today.
I yield back.
Chairwoman FINKENAUER. Thank you, Mr. Crow.
And now I would like to recognize Ranking Member Chabot for
5 minutes.
Mr. CHABOT. Thank you, Madam Chair.
Mr. Hebrink, I will begin with you, if I can. We have
already discussed a little bit about aeroponics. I had an
opportunity to tour a facility in Cincinnati a year ago, year
and a half ago, something like that, and was very impressed
with it.
And could you kind of explain the difference between
aeroponics and aquaponics and hydroponics and maybe some of the
pros and cons of those, and also just some of the challenges
that in aeroponics they have nowadays, like perhaps the high
energy costs that you have to be concerned about? There are
ways around that. And if there are any tax advantages that
somebody in that industry might have and are they temporary or
not? Just anything in those areas that you might like to
discuss.
Mr. HEBRINK. Congressman, I don't pretend to be an expert
in the production of aeroponics----
Mr. CHABOT. You are the closest thing we have here today,
so we are----
Mr. HEBRINK.--but my understanding of the difference is
that, as we mentioned, in the aeroponics, the roots are
actually suspended in air and they are misted or sprayed with
the nutrients, as opposed to aquaponics, where they are
actually immersed in liquid.
But I think the challenge along the way is, whenever we
venture into a new dimension of agriculture, which might be
viewed experimental at some point in time--and certainly Mr.
Anderson, as he began to put together his business plan, there
weren't like operations in the area for us to draw on to
compare and to know whether his was going to be a successful
venture. So he was going into a new type of agriculture and had
to market his produce in a unique manner.
That is one of the challenges for small businesses
beginning, regardless of the type of venture, is to not only
put together that business plan but then to convince a lender
and someone else to have confidence in the plan that they put
together and that they will ultimately be able to succeed. And,
fortunately, he has been very successful in his venture.
Mr. CHABOT. Thank you very much.
And I will open this up to any of the members of the panel
that might like to comment about it. Could you discuss,
perhaps, access to land, the challenges that there are there,
kind of the cost of it? And how does one get started? And is it
necessary to be in a family where there is a history of this?
And that sort of thing. So anybody who would like to take that
on would be--yes, ma'am.
Ms. MULLINS. I will just comment on that. Not coming from a
family farm and having land to inherit, it is very challenging
for me to even, you know, look at financing options with
student loan debt in addition.
But just the opportunities that are there to transition
land from farmers, like you mentioned, that are being
disincentivized through taxes not to even sell to family
members or outside of their family is something that can really
be looked at. So I guess that is my only comment.
Mr. CHABOT. Thank you.
Yes, Mr. Keesling.
Mr. KEESLING. I would add to that that I have been in the
same community where we are planning to live for, you know,
going on 3 years now. A lot of agriculture land isn't even
advertised. And that that is advertised is advertised as a
business, and it is going to be a whole operation, and it is
going to be well into seven figures. And, you know, no one at
this panel is ready--well, three of this at this panel aren't
ready to do that.
So that land that is advertised is recreational, is
hunting, is wherever they can get the most value out of that
land. And rarely do they see that as going to someone that is
trying to pursue a career in agriculture, even if it currently
stands as agricultural land.
I see a lot of farms being sliced up, 40 acres at a time,
to support a retirement portion for that farmer or to
supplement them as they are trying to transition and pay those
capital gains taxes that were mentioned earlier.
Mr. CHABOT. Thank you. Yeah.
And related to the capital gains taxes, et cetera, that you
just mentioned, would any of you want to touch on or have any
experience or background or knowledge relative to our current
Federal estate tax laws and how it can be challenging for
passing a farm from one generation to another.
And those tend to be one of the areas where the existing
Tax Code really ought to be reformed to encourage it going from
generation to generation rather than having to sell it off to
pay the taxes.
Yes?
Ms. MULLINS. It is my understanding that the estate tax
that is there disincentivizes those farmers from selling their
land before they pass on. And so it is meant--you know, they
are encouraged to keep it in the estate so they don't have to
pay the taxes.
One way around that is to have a capital gains tax
exemption for land that is being passed on to young and
beginning farmers, which the National Young Farmers Coalition
has a proposal for. So something like that could help
incentivize rather than decentivize farmers that are, you know,
older and don't have anybody that they are wanting to pass
their land on to or are not going to because of, you know, tax
reasons.
Mr. CHABOT. Thank you.
My time has expired. Thank you.
Chairwoman FINKENAUER. Thank you, Ranking Member Chabot.
I would now like to recognize Representative Angie Craig
from Minnesota for 5 minutes.
Mrs. CRAIG. Thank you, Madam Chair.
Mr. Hebrink, thank you again for being here today on behalf
of farm credit. I am excited to have yet another Minnesotan in
Washington testifying before one of our committees and sharing
your story, especially as it relates to farm economy and young
and beginning and small farmers.
You mention in your testimony a number of YBS stories
around farm country in Minnesota, including Regeneration Farms,
which has operations in Northfield and Faribault; the Hmong
American Farmers Associations, with farms in my district that
grow and sell food directly to area restaurants.
In the case of Regeneration Farms, they initially applied
for a loan through the SBA but didn't qualify because the
business was considered a startup with no financial history and
insufficient collateral. So Compeer stepped in to help them get
the business running.
Can you give us a little more detail about that financing
experience with Regeneration and the Hmong Farmers Association,
how you think those examples can guide this Committee to make
those SBA loans more accessible?
Mr. HEBRINK. You know, many pure production agricultural
loans are more FSA-oriented as opposed to SBA-oriented. When
you get into the case of Regeneration Farms, it is that
processing aspect of their business that qualifies them for the
SBA loans.
I mentioned that they are having difficulty continuing to
access the total amount of capital that they would like to
continue to grow their business, because we are operating
within conventional underwriting standards as opposed to what
we would expect to be more relaxed underwriting standards
through an SBA-type program.
You mentioned the Hmong American Farmers, and Compeer
supports the Hmong American Farmers. In the Twin Cities
metropolitan area, we have Latino farm associations, Asian farm
associations. And they become a critical part of local farmers
markets. It is a microloan program that we help to get those
farmers started. We have grants to help train them in their
business activities, to help with their business planning and
tax preparation. Through those types of programs and in
conjunction with the USDA, we have helped those communities of
immigrant farmers become a mainstay in the farmers markets in
the metropolitan area.
Mrs. CRAIG. That is great. Thank you so much.
And I assume access to more capital would just mean
business growth for these entrepreneurs, correct? More
marketing?
Mr. HEBRINK. Yes. That is oftentimes one of their greatest
struggles. They can get access to a certain level of capital
based on the equity or the cash flow that they have, but they
need additional sources of capital to continue to grow their
businesses. And I think that has been--the testimony this
morning from the other witnesses supports that exact challenge.
Mrs. CRAIG. Thank you so much.
I want to turn to Mr. Keesling at this point.
Mr. Keesling, you may know that my district actually ranks
in the top 50 dairy-producing congressional districts in the
Nation. But it is a really tough time right now for dairy
farmers.
Despite these market forces, why are you choosing to take
this leap right now? And what sets your business apart? How
could your practices and financing structures benefit other
struggling dairy farmers?
Mr. KEESLING. Well, thank you for your contribution to the
dairy industry.
I would go back to the Chairwoman's opening remarks, in
that it was both not just economics but the social structure of
the family farm. I am kind of putting my military retirement
funding as my off-the-farm income up to bat to fund this farm
and provide it for the next generation. My daughter is behind
me. So hopefully she will be there with my children.
And what sets ours apart is that the family that I am
purchasing this farm from did not fall victim to ``get big or
get out'' in the 1980s and into the 1990s. Their operating
loans were kept low, their families were kept large, and their
ability to do manual labor did not disappear.
So I think if you have the drive and you want to work hard
and you are willing to do that, you will be successful. If you
find the right mentorship and you find the right program, as I
did, you will be able to take over a farm and you will be able
to carry it into the next generation.
Mrs. CRAIG. Thank you so much. And thank you for your
contribution, and to all of you.
With that, Madam Chair, I yield back.
Chairwoman FINKENAUER. Thank you, Representative Craig.
And, with that, I am going to do just another round of
questions for anybody up here who wants to ask them, just given
the smaller group here today. So, with that, I will recognize
myself for 5 minutes.
Mr. Hebrink, as you know, we are experiencing right now a
downturn in the agricultural economy. I have seen it firsthand
in my district. We have been all over, whether it is, you know,
the small town of Manly, where we have had listening sessions
with farmers in regards to, my goodness, the attacks on, you
know, ethanol with refinery waivers that have hurt our corn
growers, whether it is seeing that biodiesel tax credit expire
over 18 months ago now or more that should have been passed
last Congress, which I am very hopeful we can get through this
Congress to help our soybean producers, or whether it is this
ongoing trade war that we have seen now the retaliatory effects
for over a year and a half. You know, I just saw, actually,
this morning, before I came in, there was a notice that there
is an ethanol plant over in western Iowa that is shuttering its
doors because of the ongoing trade war with China.
And I am concerned every single day. I know we are hearing
from folks dipping into 401(k)s. We had a woman actually
testify in front of this Subcommittee earlier this year saying
she is telling her three sons not to go into farming. These
are, you know, not unique stories.
And, you know, on top of all of this, we are seeing folks
file for bankruptcy. I know, right now, Iowa, our farmers are
holding more debt than farmers even in California. We just
surpassed them this year, which is not something we, you know,
want to do. And, obviously, farm bankruptcies across, you know,
many farming regions are at the highest point in over a decade.
In some places, in 2018, farm bankruptcies actually doubled
from the previous year.
I am proud to be a cosponsor of the Family Farmer Relief
Act. This bill raises the Chapter 12 operating debt cap to $10
million, allowing more family farmers to seek relief under the
bill. It is bipartisan, bicameral, both support from our
Senators, actually, in Iowa as well, and something, you know,
we need to be dealing with.
And with the net farm income down 50 percent since 2013
and, obviously, like I said, debt at the highest level since
the 1980s farm crisis, family farms and the future of many
rural communities are in jeopardy.
You mentioned in your testimony how some young farmers have
encountered issues when trying to access, on top of all of
this, financing programs through the Small Business
Administration and USDA.
How do you think we can improve these programs and increase
flexibilities to make sure that they are helping our new and
beginning farmers navigate these new and very trying economic
times?
Mr. HEBRINK. Well, thank you for the question.
As I mentioned, some of the challenges with the SBA
programs has been the fees. The fees can be very substantial. I
think they are over 3 percent for loans of $150,000 and up.
That is not a very large loan in many small businesses. Those
loans are intended to help support small businesses, but those
kind of fee levels really offset the benefits of the
guarantees.
We also understand that the SBA programs are very time-
consuming. Whatever we can do to streamline those programs and
relax some of those standards to meet the financial realities
of a beginning business would be very helpful.
Chairwoman FINKENAUER. Thank you. Thank you for that
insight. I appreciate that.
And, Mr. Grimm, I will just end with you too, just if there
is anything else you want to make sure that Washington hears
and that this Committee hears. Because these stories that I
have heard from Iowa I know you are hearing from your friends
back home as well. And, again, just the need to get this trade
war with China figured out and move on.
Is there anything you would like to say to us and to the
administration while you are here in Washington?
Mr. GRIMM. Help us take the risk out of farming. That is
primarily what the tariffs are doing right now. It is hard for
us to make decisions on how to run our farms when we don't know
the real future of agriculture. And those tariffs are part of--
they make it hard for us to make decisions, so--and the
uncertainty for our communities.
Chairwoman FINKENAUER. Yeah. Thank you, Mr. Grimm.
I appreciate it, again, for you taking the time to come all
the way out here. I know you guys took time away from your
farms and your operations to be here, and I, again, just can't
thank you enough.
And, with that, I will recognize Mr. Hagedorn for a second
time as well. Thank you.
Mr. HAGEDORN. Yeah. Thank you.
I would just give a little bit different perspective. I
mean, in the farm country, the farmers who I have spoken with,
it has been tough for 5 and 6 years. This hasn't been just
since we tried to reset these trade deals, for instance.
And, you know, in the last administration--you know,
agriculture goes up and down. It is farming. We get that. But
some of those regulations that they were looking to put on our
farmers were going to make it pretty tough. And I think some of
the things that have been done in the last couple years by,
frankly, the President and some of the folks in my party
getting rid of that--Waters of the United States. If we didn't
do that, we would have farmers every day talking about how
onerous that is and how it is driving up their cost.
ObamaCare has been a tough deal. You know, we have farmers
out in our district, their premiums are through the roof, but
the deductibles are so high, the insurance is worthless. And
you start taking $25,000, $30,000, $40,000 out of a farmer's
income year-in and year-out, 4 and 5 years, for nothing--
because they hope never to have to use it--that is a tough deal
on the bottom line.
And, you know, the tax reform bill, I think that helped. It
allowed a lot of farmers to expense their items in current
years. And I haven't talked to any farmers yet that want that
repealed. They think that was a good thing.
And energy prices. You know, there are some policies, I
think, that have been changed, that were anti-U.S. energy,
driving up the costs. And for farming and agribusinesses, that
is critical. Forty percent of the cost of producing a bushel of
corn is energy, so when the price goes up, guess what? The
farmer is going to be a little less productive, a little less
efficient. It puts the squeeze to him.
But on trade, I agree with you. Let's expand trade. Let's
make sure that we pass the United States-Mexico Free Trade
Agreement. Because when we do that, it is not just going to
help farmers, agribusinesses, machinery, mining, everybody,
right? It is going to create jobs. But it is going to give us
that momentum we need to look at those other countries that we
are dealing with, like Japan and China and the United Kingdom
and others, and say, we can have better agreements, we can pass
these things, and we can build momentum for those deals.
And the bottom line, we want to drop down those barriers
for farmers, we want to expand our markets. Because our
agribusinesses and farmers are the best in the world. They can
compete with anyone. But they need a fair deal. And those folks
in China have been cheating us for a long time in a number of
areas--dumping steel. They are dumping quartz in our district.
They have been hurting agriculture. And some of it is--you
know, it is not all tariffs. But I hope we can get a deal. I
hope we can expand it forward. I hope we can work together on
that.
With that, I would yield back. Thank you.
Chairwoman FINKENAUER. Thank you, Ranking Member Hagedorn.
Appreciate you all being here today. Again, obviously,
there is a lot on your mind here today that are coming to
testify. There is a lot on the minds of our farmers and folks
all across the district, in my hometown, who are worried every
day right now about their future.
And I have to tell you, last night I was able to smile. I
keep up with a lot of folks back home--friends, family,
neighbors--by Facebook. It is great to see the pictures that
they are posting. And one that really made me happy, there is a
young girl that lives next-door to where I grew up. That is
where their family farm is. They actually live on her
grandparents' family farm. And her dad works at John Deere. Her
mom works for the school district as a teacher, like my mom was
a--my dad is actually a union pipefitter/welder, and my mom
worked for the school district in Dubuque. And her name happens
to be Abby as well. And so I love keeping up with little Abby.
And yesterday I saw she won--it was her first big
competition with 4-H showing cattle, and she won the novice
showmanship award. And, you know, I thought of her as I was
going into this meeting as well and just how much we just have
to put differences aside and put our districts first, put the
things that we are hearing in our district front and center
when it comes to the future of both our ag economy and then
rural areas in this country in general. Oftentimes they have
been ignored.
And the fact, again, that you guys took the time to make
sure that you were heard loud and clear, it means the world to
us. You know, as we have heard, obviously new farmers and
ranchers face some very significant challenges. But there are
opportunities for the next generation to be part of the
solutions to revitalize our rural communities and to make a
life for their families and to provide a service to our
country.
As older farmers leave, we know we need younger ones to
take their place, maybe even little Abby one day. And we
applaud each of you for doing your part to ensure that the next
cohort of agriculture business can continue to produce the
food, goods, and fuel that our country relies on.
We look forward to seeing how the USDA sets up the
Beginning Farmer and Rancher Coordinator position that Congress
called for in the 2018 farm bill. And we will do our part to
ensure that the USDA and SBA improve their outreach and
assistance to agriculture entrepreneurs.
I would now ask unanimous consent that members have 5
legislative days to submit statements to the record for
supporting materials.
Without objection, so ordered.
And, again, thank you all. We have a lot of work to do. And
I am excited to get back home during the district work period
in August and continue to hear from folks in my district.
And, hopefully, I might even get to see you, Jason. That
would be great.
But thank you again for taking the time.
And without any further business to come before the
Committee, we are adjourned. Thank you.
[Whereupon, at 11:19 a.m., the Subcommittee was adjourned.]
A P P E N D I X
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Opening Statement of Ranking Member Joyce
Subcommittee on Rural Development, Agriculture, Trade, and
Entrepreneurship
Hearing: ``Supporting the Next Generation of Agricultural Businesses''
Remarks as Prepared for Delivery
July 25, 2019
Thank you, Madam Chairwoman. Today, our subcommittee will
examine the difficulties affecting America's new and beginning
farmers.
In my home state of Pennsylvania, we are proud of our
agricultural sector. I am pleased to say that my district alone
is responsible for 18% of Pennsylvania's agriculture sales and
is home to over 8,000 farms. 97% of the farms in my district
are family farms, but many are struggling with the decision to
either pass their farm down to the next generation or encourage
their children to explore other careers which may have an
easier path.
I am impressed by the entrepreneurial spirit of the 2,741
new and beginning farmers in my District, but we need to see
that number grow. PA-13 is the number 1 Congressional District
in the state for milk from cows; sheep and goats' wool and
milk; total cattle; and market value of fruits, tree buts, and
berries. We rank in the top 100 of Congressional Districts for
total number of producers and total number of farms, market
value of agriculture products sold, total sales of livestock &
poultry, the value of sales of poultry & eggs, and the number
of cattle, calves, sheep, and lambs. Even more impressively: we
are in the top 50 Congressional Districts for the value of
sales of fruits, tree nuts, berries, milk from cows, sheep and
goats' wool and milk, total number of milk cows, and land in
orchards by acres.
But our future as an agricultural districts jeopardized by
the fact that of the over 14,000 producers in my district, not
even 2,100 of them are under the age of 35 and nearly 4000 of
them are 65 and older.
Communities in my district and across the country rely on
our nation's 2.2 million farms. Of these, 88 percent are small,
and only 20 percent are operated by new and beginning farmers
and ranchers. One U.S. farm will feed about 165 people
annually. With a projected global population of 9.7 billion by
the year 2050, the world's farmers will need to grow
approximately 70 percent more food than they are currently
producing. Yet my state alone lost over 6,100 farms over the
last 5 years. Mounting demand for food, population flight from
rural areas, and an aging farm population prompts a fresh
evaluation of opportunities and support systems available to
new and beginning farmers.
Today's witnesses will discuss their experiences in the
farm industry and give us some insight into what programs work
best for new and beginning farmers and ranchers. I look forward
to their testimonies.
With that, Madam chairwoman, I yield back.
[all]