[Congressional Record Volume 142, Number 115 (Wednesday, July 31, 1996)]
[Extensions of Remarks]
[Pages E1418-E1419]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       INCENTIVES FOR AGRICULTURE

                                 ______
                                 

                         HON. WILLIAM M. THOMAS

                             of california

                    in the house of representatives

                        Wednesday, July 31, 1996

  Mr. THOMAS. Mr. Speaker, 1 million acres of farmland in the United 
States will be eaten up by parking lots, freeways, and suburban growth 
this year. In fact, within the hour, one acre of precious farmland in 
the Central Valley of California will be taken out of production.
  The Central Valley of California currently produces over $13 billion 
in agriculture produce and feeds millions in the United States and 
around the world. Farmland in areas surrounding cities is being 
displaced by urban development at one of the fastest rates in history 
and for this reason our farmers have been placed under new pressures. A 
time can be foreseen in which an area like the Central Valley may not 
even be capable of feeding itself because of urban outgrowth.

[[Page E1419]]

  When the great cities of our country were settled, they were 
developed near rich agricultural land to assure an adequate food 
supply. As urban areas continued to sprawl, many fertile acres were 
consumed and many more were placed at risk. Over the past 10 years, 
urban sprawl has eaten up over 26 million acres of productive farmland: 
an area the size of Kentucky has been displaced by urban development. 
Most of the farmland lost in the country has been located in urban 
influenced counties--where the density is at least 25 persons per 
square mile. A recent study by the American Farmland Trust estimated 
that the farmland in the urban influenced counties was 2.7 times more 
productive than the remaining U.S. counties. Eighty seven percent of 
our domestic fruit and nut production is also grown in these threatened 
counties.
  Every citizen should be concerned with a secure U.S. food supply and 
preservation of productive lands because the loss of farmland affects 
more than family farmers. Others affected by the land loss include the 
large agriculture support sector that ranges from fertilizer and 
equipment suppliers to fruit and vegetable processors. The general 
public could also face grocery counters half-full of not so fresh, 
costly produce imported from around the world. Agriculture is a basic 
and fundamental part of life from the food we eat to the clothes we 
wear. It is important that during times of fast growth we take a closer 
look at how our land is being used and how we can protect those that 
are being displaced by the urban community.
  Farming has been placed under new pressures that are coupled with the 
rising costs of this capital intensive business. For example, farmers 
putting in a wine grap vineyard will encounter 4 years development 
costs over $17,000 dollars per acre above the land acquisition costs. 
Pistachio farmers should expect at least $7,000 dollars in 
preproductive costs per acre and olive growers $5,000 dollars an acre. 
These costs could literally double or triple dependent on the value of 
the land.
  Aside from the high start up costs of crops such as orchards and 
vineyards U.S. farm real estate values also continue to rise. According 
to statistics compiled by the U.S. Department of Agriculture the value 
of U.S. farm real estate has risen 6.4 percent over the past year to 
$832 per acre. This $832 figure may be rising, but it still does not 
nearly reflect the cost of acquiring a prime piece of farmland in 
highly productive, urban-influenced states like California and Florida. 
An average piece of farmland in California and Florida is worth over 
$2,000 and can be worth as much as $17,000.
  Along with high costs farmers continue to be plagued with storms, 
disease, and pests that destroy many acres of orchards and vineyards 
annually. Some of this costly acreage has not even reached a productive 
state. Crops like tangerines and cherries can take 5 to 6 years to 
reach productivity. In a natural disaster a farmer with a crop in a 
preproductive state may have trouble sustaining large losses because he 
does not have a return on his investment. Most farmers do not realize 
an actual profit for many years after a productive state is achieved. 
Natural disasters particularly impact small family farms that already 
have a small profit margin.
  As a witness to the rate of urbanization in my own district, I have 
developed two incentives that would amend the 1986 tax code and keep 
families in farming and land in rural uses. I recently introduced H.R. 
3749 to amend the tax code to promote replacement of crops destroyed by 
casualty. This bill will provide an incentive to replant by allowing 
them to deduct the cost of replanting their destroyed crop in the event 
of freezing temperatures, disease, drought, or pests, all events that 
cannot be controlled. It allows farmers to deduct the costs of 
replacing key infrastructure.
  I have also introduced H.R. 520 to make it easier to tranfer farms 
from generation to generation. According to the U.S. Department of 
Agriculture the average size farm in the United States is 469 acres. 
The land alone of an average farm in California is worth over $1 
million and can be worth as much as $8 million on prime farm land. 
These numbers are the primary reasons that I have introduced H.R. 520 
to double the current maximum benefit under the estate tax special 
valuation deduction. A farmer can be worth millions in terms of acreage 
but that does not necessarily mean that there is cash to pay estate 
taxes, or--during his life--other unexpected costs. This results in 
many farmers splitting their land up into parcels and selling out to 
developers just in order to cover their costs.
  Current tax law that allows for $750,000 in maximum benefits is 
outdated in accordance to the cost of farming today. After you figure 
in the value of crops, irrigation systems, improvements (buildings, 
etc.), and equipment, the value of today's farm may be worth almost 
twice as much. The bills proection of $1,500,000 would allow for more 
continuity in farm acreage when transferring land between generations, 
avoiding the need for families to split up their land to pay off the 
estate tax.
  Prime agriculture land is being authorized as we speak. Providing 
these small incentives to America's farmer would encourage families to 
stay in farming and secure an abundant food supply for the 21st 
century.

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