I am president of AFT and a third-generation cattle rancher and grain producer in California. American Farmland Trust is a national, non-profit organization with 30,000 members working to stop the loss of productive farmland and to promote farming practices that lead to a healthy environment. I am here today to speak for AFT's members and the majority of farmers who care about resource stewardship. Mr. Chairman, the present estate tax system is a growing problem for American agriculture. Allow me to make three observations on the current system.
Farmers tend to be land rich but cash poor.
This lack of liquidity often results in farmers subdividing their farms to raise money to pay the estate tax. To address this problem our field staff has been educating farmers about the need for estate planning, and promoting voluntary purchase of conservation easement programs as a way for farmers to become more liquid without having to sell the farm. The matching funds provided by the Farmland Protection Program in the 1996 Farm Bill will contribute to this goal, and we hope that the program can be expanded to meet the national demand. The liquidity problem is especially severe for farmers in areas that are suburbanizing because their proximity to urban centers increases the gap between the market value of their land and its agricultural value, increasing the estate tax burden. The estate tax system is thus inadvertently speeding the conversion of America's most productive farmland to sprawl-type development.