June 24, 2015
Access to farmland remains one of the most difficult challenges that new farmers face when looking to start farming. Fortunately, since 2008, there has been a federal incentive program that encourages retiring landowners to sell or lease long term to new and underserved farmers.
The Transition Incentives Program (TIP) is an option for farmers and landowners enrolled in the Conservation Reserve Program (CRP) who both have land expiring from CRP and who intend to retire from farming that particular land. For more information on how TIP works and who is eligible to participate, check out our Grassroots Guide.
New Farm Bill Funding
The 2014 Farm Bill renewed funding for TIP after program funding ran out in early 2013. Since passage of the farm bill last February, USDA has used roughly 26 percent of the total $33 million in new funding allocated for the program.
This works out to $8.5 million that has been paid to retiring landowners across 18 states, allowing 503 new, minority, and veteran farmers access to over 84,000 acres of farm and ranchland.
Despite the fact that the most recent farm bill provided an additional $7 million more for the program than in the previous farm bill cycle, TIP will likely run out of money before the next farm bill is taken up in 2018. NSAC anticipated the high demand for this program by new farmers and retiring landowners, and argued for additional funding in the last farm bill debate. We will be closely monitoring the usage of program funds over the next few years.
Where is TIP most popular?
It is no surprise that TIP is most popular in states with high numbers of both acres expiring from the CRP program and beginning farmers. Minnesota stands out as one state that has demonstrated both high demand and effective usage of the program and has managed to obligate $2.2 million to retiring farmers who are in the process of transferring a portion of their farm to 146 new, minority, and veteran farmers in their area.
This translates to 19,528 acres of Minnesota farmland that have been effectively transferred to the next generation of farmers thanks to this federal conservation incentive program.
Of all states, Montana has enrolled the highest number of acres in TIP, with over 21,299 acres of farmland across the state transferred to new and underserved farmers. This translates to $1.7 million in CRP rental payments to retiring landowners, the second highest in the nation.
Washington state has also taken advantage of this federal incentive program and has already gone through nearly 70 percent of the total funding allocated to the state. With over $1.3 million in TIP funds already obligated to farmers across the state, it is very likely that funding will run out prior to the reauthorization of program funding in the next farm bill. This means that Washington retiring and beginning farmers will likely be turned away from the program as soon as next year unless more funding is made available from other states that are not utilizing the program.
The Transition Incentive Program has also proven popular in other Northern Plains states such as North Dakota and Nebraska, which have both gone through significant portions of the state’s funding, and are likely to run out shortly.
Where is TIP most underutilized?
As impressive as FSA field offices have been in getting the word out about this program in some states, there are many other states that have hardly utilized this program despite large number of expiring acres.
Texas sits at the top of the list with the largest amount of TIP funding left, as well as the highest number of acres expiring from the Conservation Reserve Program within the next few years. Over the past 15 months, Texas FSA offices have only managed to get a little over $177,000 out the door to retiring farmers to help connect them with new and underserved farmers looking for land to start their farming operations. This translates to only 6 percent of the total funding allocated to the state, with an additional $2.8 million to use over the next few years.
This low program usage is surprising given the number of acres expiring from CRP across the state. Between now and October 2016, nearly a quarter of a million acres in Texas will be exiting CRP and be eligible for participation in TIP.
Kansas, South Dakota, Illinois, Iowa, and Missouri also have demonstrated low interest in the program given the large state allocations and number of acres expiring from CRP. It’s possible that farmers in these states are choosing not to retire from farming in as great numbers as other states across the country, or may be unwilling to part with highly-valued farmland.
More outreach is needed in these states in order to better understand the percentage of expiring CRP land that is operated by a farmer who intends to retire for farming and thus eligible to transition that land to a beginning, minority, or veteran farmer.
There are some states, primarily in the south and including Georgia, Alabama, Mississippi, Louisiana, and Oregon, that have not used any TIP funding to date and whose large state allocation gives the impression that interest should have been higher in these states. However, most of these states have relatively few acres expiring from CRP in the coming year, and many of those CRP acres are in trees and thus may be less likely to trade hands.
What’s Next for TIP?
Last week, USDA sent a letter to all farmers with land enrolled in CRP whose contracts are set to expire later this fall. Farmers have many options of what to do with these expiring acres of farmland that have been set-aside from production for environmental benefits for the past ten to fifteen years.
One of the options that farmers can choose that is outlined in the letter is to participate in the Transition Incentives Program if that farmer intends to retire from farming. Check out our blog post from last week with more details on the letter that went out to farmers.
However, NSAC has heard numerous stories from our members and farmers on the ground about the difficulty in utilizing TIP particularly due to the inability of FSA to connect beginning farmers with CRP landowners. Due to constraints on what data FSA is allowed by law to share, many new farmers are left on their own to locate CRP farmers who may be interested in participating in TIP.
NSAC and our member organizations will continue to work with FSA on ways to improve outreach to both CRP landowners and beginning farmers on the TIP program and find more effective methods to connect them.