According to the 2012 Census of Agriculture, the average age of a New Mexico producer is 60.5 years, which is the second highest age, only behind Arizona. These producers, and for that matter, the entire state of New Mexico, will undergo a transition in the near future, which will shape our destiny for years to come. The next generation of agriculturists, with their energy, dreams and drive, will soon be in a position to take on the challenge of feeding their communities, the state and the world.
Or will they?
Congress is currently debating tax policy. Among the discussion is the estate tax. Proposals to raise the estate tax exemption or delete it all together will have a profound impact on the next generation of agriculturists. Farming and ranching enterprises are asset rich and cash poor. These enterprises operate as a unit, one part relying on the other. They are valued as a whole, and splitting them up may cause the entire business to fail, which is a position that many in agriculture face when dealing with estate tax situations.
The farm and ranch property often has to be split and sold to satisfy estate taxes upon the death of a family member. This predicament leads to the next generation having to take family assets to satisfy the tax in order to preserve the enterprise as a whole, leaving these individuals in a position in which they cannot succeed financially, eventually losing the family business.
As I meet with agriculturists across New Mexico, most who have been on a single place through multiple generations, the message is clear. They are most concerned about whether they will have the ability to pass on the agriculture business to the next generation without having to break it up and make it an unviable entity due to perceived asset appreciation triggering an estate tax.
New Mexico agriculture will witness a great transition in the next few years. If the estate tax continues in its current format, that transition could lead to less local food production. Let’s encourage congress to repeal the estate tax, or at a minimum, raise the exemption to protect our family farms and ranches.
– Jeff Witte, New Mexico Secretary of Agriculture