Farming for the State

TL;DW

Yeah, so the audio is kind of rough. I’m working on patching that up, but if you couldn’t bear to watch and you’re curious as to what I was rambling on about, here it is in text:

I grew up in Upstate NY – four or five hours north of the city – and my wife and I lived in Vermont for a couple of years. We wanted to raise our growing family in the vicinity of our extended families, but we also wanted a little bit of land where we could raise animals and grow some vegetables. And of course we wanted one of us to stay home with the kids. Unfortunately, the high taxes and cost of land in New England made this goal all but impossible. And to be fair, we’re not the only ones feeling this pinch as many young adults are leaving the Northeast for cheaper areas around the country.

One of the issues with this high cost of living that often goes overlooked is the effect it has on farmers. Farmers may have tractors worth $100k, or expanses of rolling fields dotted with $600 milk cows, but most of what you see is leased. When the cost of living goes up, farmers, who’s products are heavily subsidized and price controlled by the State, start to feel a bit of that pinch, especially when it comes to land taxes. Yes, farmers often get a subsidy on taxes, but it still goes up. Also, consider if you’re a new farmer trying to find land to set up your operation: you don’t get a break on the price of the land, and often old tracts of land are excellent areas for development which drive the cost up. Rhode Island has been hit hard by development and has come up with a plan to combat skyrocketing land costs for future farmers, but as it turns out, it’s one of the scariest plans out there and is akin more to feudalism or communism than anything else.

In the past few years, Rhode Island’s land prices have skyrocketed. Where as farm land across the US is valued at an average of $3080 per acre, Rhode Islands are $13,800/acre: over $10k per acre. Why? Mostly just supply and demand: since 1940, Rhode Island has developed 80% of it’s farmland, so it stands to reason that as less and less developable land exists the cost will go up, no matter what it’s used for. But, what makes Rhode Island so special? Well, it’s only 37×48 miles but has 400 miles of coast line. Anywhere you live, you’re pretty close to Narragansett Bay, and anytime you’re near a desirable feature, prices go up.

Rhode Island though, ranked #7 in the country for it’s tax burden, is not cool with this influx of development and they are attempting to make an effort to encourage farmers to build new farms in the state as opposed to having them move somewhere cheaper. In fact, Rhode Island has the highest population of new farmers than any other state, but farmers can’t find affordable land. Where are all these farmers coming from? If you examine the local surroundings i.e. New England, you might get an idea: millenials throwing off the chains of the oppressive capitalist system that afforded their parents such wealth as to allow their children to purchase $150k, degrees on how to be a farmer. But I digress.

Already, the State of RI owns two farm areas – one is a 150 acre tract, the other is a 50 acre parcel. Each of these farms is divided into smaller areas and leased to local farmers who grow food for CSAs, farmers’ markets, and even community gardens. It’s not a lot of land, (Rhode Island is only about 777,000 acres) but the fact that the State is the one who owns the land and then leases it to the farmers is rather curious.

But this is where RI’s new plan comes in, and it is something we’d be better for if they just put it down. As I said, the main reason RI has become so expensive, is because it’s a great place to build a McMansion, it’s close to the ocean and there are many old mansions from yesteryear that give the place a charming New England feel. So more often than not, when an old farm or large tract of land goes up for sale, the price tag it carries also includes the assumption that it will be developed. Well Rhode Island is going to cover the difference between the development potential value and the agricultural value for the farmers. That’s right, they’re going to buy the land for “fair market value” and then resell it to farmers for the agricultural value which is about an 80% discount. Yes, they are going to buy vacant land and then resell it at an 80% loss. A spectacular business practice only one with never ending pockets would engage in.

There is so much wrong with this. As I said, RI is already ranked #7 for tax burden, how do we all think that 80% loss is going to be covered? By taxes, and you know the State isn’t going to take it out of their existing budget, it’s going to be a new item, it’s going to cost the tax-payers even more. Congratulations Rhode Island, you’ve just made it even harder for the folks you’re trying to help.

Secondly, by removing developable land, the already high housing costs – RI’s median home cost is about $50k above average – are going to go up even more. Supply and demand, less houses means higher house prices. Again, who does this end up hurting? Not the guy who is purchasing his second home.

So all that sounds pretty stupid, but this is where it get’s really scary, the State is going to take ownership of land. They say they’re going to buy it at fair market value, and sell it back to farmers as quickly as they can, but there’s no definitive timeline here, and before you know it the State will be sitting on a stockpile of vacant land that will again raise the price of land Rhode Island isn’t keen on buying.

They claim they will only buy land for sale, and never force someone to sell, but we all know how hard the state can lean on someone when they want something. And of course, we all know how well eminent domain works when it comes to compensating land owners.

They also say they’ll only hold the land as long as it takes to transfer it to another party. Again, there is no time frame! What happens when the agricultural valuation becomes too steep for farmers and the State is just sitting on land that it owns? No doubt it will create more of these land trusts in which farmers lease the land from the state. And I think we’ve all seen how that model has worked in the past.

So if you end up buying land at this discounted price, your new deed will come with a restriction that states the land must remain a farm. What does that mean? Broadly, it must continue to produce livestock or agricultural crops. So what happens if after buying land and trying this farming thing for five years, you give up and want to sell? You have to find someone who is willing to continue to produce livestock or agricultural crops, but what if you can’t? Are you stuck? Will the state step in and re-purchase the land? How easy would it be for the state to now keep this land in a continuous cycle of private individual to state ownership?

What about crony capitalism? What happens when the state starts playing favorites and decides to buy land that is garbage for development but is owned by a friend of someone in the State? Or the state decides to forgo purchasing a particular plot because a key developer friendly with the State wants to buy it?

Rhode Island’s plan is an absolutely, horrible idea that leaves too many questions unanswered and too much leeway for the state to accumulate land and power and favors.

If we consider this from a liberty-oriented perspective, we can see how this would work quickly and easily.

As quantity of houses declines, land prices go up and new houses are built. As prices go up, lower income households are forced out. While this may sound horrible, the fact is that as these lower income households move, job vacancies are left and eventually those low-paying jobs will demand a higher wage. Likewise, private organizations like Habitat for Humanity can step in and build houses for individuals for much lower prices (they’ve done this at least once, building a small home for a divorced single mother of two who makes ~$40k/year and selling it to her for $110k). Likewise, there may be an increase of rental units with affordable rents. The problem is when the State get’s involved and subsidizes this housing and land prices, or puts regulations on development, they create an artificial environment. The prices are controlled and as soon as you start controlling one aspect of the market, everything else follows suit.

One of the concerns cited by the state of Rhode Island is the lack of locally grown, healthy, organic produce available to it’s citizens. Once again, if this was something that was that important to the local populace, the free market would take care of this. Many larger farms are subsidized by the government, some farmers are paid not to produce certain crops so the crops that are produced command a particular price. There are regulations put on the way farm products can be sold. These regulations hinder the free market. A conventional dairy farmer can get about 2-3 dollars for a gallon of milk, but when they sell raw milk to locals, that price at least doubles. The same can be said of meat products, but alas, the state says no and forces farmers to demand lower prices.

And believe it or not, there are ways for individual citizens to keep undeveloped land undeveloped. My wife and I looked at purchasing some land near our family in the Great Peoples Republic of New York, and we actually found some fairly cheap land. I think it was right around 100 acres, and the list price was $110. Usually there’s something wrong with land that cheap, but I knew the area from my childhood, and there were no environmental hazards in the area that would drive the price down, and while it was a little swampy on one end, most of it was pretty nice.

So we explored further and got in touch with the real estate agent, and as it would turn out, the seller, deeming the importance of undeveloped land, put a few clauses into the deed. As it turned out there was a small public trail that cut the corner of the property and that had to be left alone, there would also be no commercial log harvesting or sale of wood products – i.e. firewood, cabinets, etc. Further, the homestead site was a designated one acre spot and this was the only area building, gardening, or animal husbandry could take place. You could still hunt and fish the land, and create small hiking trails, but there was to be no motorized traffic – ATVs, tractors, snow mobiles, etc. The inability to use the trees on the lot to make cabinets for sale, or other products was a big turn off, but the real deal breaker was the one acre homestead site. In fact, I was pretty pissed. 100 acres of land, and you decide to limit the homestead area to one acre? How about five or ten acres, something a small farmer could actually utilize? I can see the desire to stop development, but these restrictions were ridiculous! But guess what, it was the sellers choice. It is there property and they decided to make these covenants and the price reflected that. The seller decided that vacant, undeveloped land was of such importance they were willing to take a pay cut of epic proportions (land usually goes for $7-10k/acre in the surrounding area.) But that’s the free market. That’s a voluntarily entered contractual agreement. That’s private property rights. I may disagree with the contract, but no one is forcing me to enter into it.

Rhode Island is forcing tax payers to enter into a contract by buying land and selling it at an 80% loss to farmers with the caveat that the land will remain a farm in perpetuity. It is corrupting the free market and looking to gain the means of production. This is unacceptable.

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Now get out there and sow those seeds of liberty so we can all reap sheaves of freedom together.