1. Beginning Farmer Tax Credit Act - Board of Directors

• President's Report
• Board Members
• Staff
• Beginning Farmer Board Participation

2. Financial Reports

• August 28, 1999 - June 30, 2000 Financial Report

3. Beginning Farmer Program Development

• LB-630: Economic Impact Assessment
• History
• Logo
• Brochure
• Participation

4. Promotional Activities

• Round Table Discussion
• Governor's Conference on Agriculture
• USDA Advisory Committee
• South Central Bankers
• Gateway Farm and Dairy Exposition
• Media Interviews

5. Statute

• Beginning Farmer Tax Credit Act Revised August, 2000

It has been a privilege to serve as the first Chair of the Beginning Farmer Board. We have had an active and involved Board that has met four times in the past year.

We met with Senator Wehrbein and his staff to discuss the original Legislative bill. After minor changes to LB 630 were approved, we spent a great deal of time organizing the Rules and Regulations that will be followed. The Regulations along with the application forms are now finalized. We have also discussed methods to educate the public about the advantages of the Beginning Farmer Tax Credit Act.

The staff of the Nebraska Department of Agriculture have been very helpful in the organizational process. Now the staff and all the Board members are ready to accept applications. We truly believe that the incentives provided by the Beginning Farmer Tax Credit Act will be beneficial to the future vitality of our state's agricultural economy.

Dale Pohlman, Chair
Beginning Farmer Board

Meeting Date	Members Attending	Guests	Staff
November 5, 1999 Board Meeting	Mary Jane Egr Dave Dearmont Roy Frederick Greg Ibach Harry Knobbe Dale Pohlman Bill Zutavern	Jeff Gaertig, Legislative Aide to State Senator Roger Wehrbein	Marian Beethe Joanne Komenda
December 20, 1999 Board Meeting	Mary Jane Egr Dave Dearmont Roy Frederick Greg Ibach Harry Knobbe Dale Pohlman Gerald Timmerman Bill Zutavern	Jeff Gaertig Dave Goeller, UN-L Beginning Farmer Program Douglas Jose, UN-L Ram Valluru, UN-L Roger Wehrbein, State Senator	Marian Beethe Joanne Komenda
January 18, 2000 Board Meeting	Mary Jane Egr Dave Dearmont Roy Frederick Greg Ibach Harry Knobbe Dale Pohlman Gerald Timmerman Bill Zutavern	Jeff Gaertig Dave Goeller Joy Johnson, Beginning Farmer Programs, Center for Rural Affairs	Marian Beethe Joanne Komenda
January 18, 2000 Unicameral's Agricultural Committee Beginning Farmer Board Confirmation Hearing	Dave Dearmont Roy Frederick Greg Ibach Harry Knobbe Dale Pohlman Gerald Timmerman Bill Zutavern	Jeff Gaertig Joy Johnson Senator Wehrbein	Marian Beethe Joanne Komenda
February 16, 2000 Revenue Committee Hearing on LB 1223	Dale Pohlman Harry Knobbe Proponents Greg Ibach	Senator Wehrbein Introducer	Marian Beethe
April 18, 2000 Board Meeting	Mary Jane Egr Dave Dearmont Harry Knobbe Dale Pohlman Gerald Timmerman	Jeff Geartig Dave Goeller Joy Johnson Rex Messersimth, KRVN Radio Station	Marian Beethe Joanne Komenda

Beginning Balance: August 28, 1999	$ 0.00
Revenue:
General Funds	$ 67,657.00
Total	$ 67,657.00
Expenditures:
Salaries and Benefits	$ 26,792.98
Operating Expenses	1,349.78
Contractual Service - Survey	5,000.00
Other Contractual Service	788.14
Travel Expenses	928.08
Board Expenses	379.50
Capital Expenses	5,969.01
Total	$ 41,207.49
Ending Balance: June 30, 2000	$ 26,449.51

There is a strong resurgence in the desire to live in rural America and Nebraska is no exception. The statistics compiled by the Nebraska Department of Revenue reveal that the number of farm exits that occurred between 1992 and 1997 were greater than the new entries. However, younger farmers with gross income of more than $20,000 entered the farming industry slower than those exiting the industry, in the same category. This reveals that there are a number of young farmers that are struggling to join the ranks of established farmers by making farming a lifestyle and livelihood. Despite this strong enthusiasm, there are a number of factors, which pose a serious challenge to the new entrants (Center for Rural Affairs). These include increasing farm size, land prices, and increasing equipment costs. There are some beginning farmers who are more fortunate to have some inherited land, access to equipment, family help and other assistance to help them get established.

Considering the situation, the next decade will be a challenge for beginning farmers trying to compete with established farmers for scarce resources. A beginning farmer survey conducted in 1998 revealed that gaining access to land, through either renting or purchasing, and equipment are the two major constraints faced by the beginning farmers (Valluru and Jose).

Gaining access to land can be through one of three means: inheritance, purchase, or rental. Beginning farmers who have access to inherited land have a significant advantage. It is the beginning farmers who either have to rent or purchase land that are facing a major hurdle in their path to get established. Some beginning farmers have the benefit of getting more advantageous rental arrangements through family ties than others who have to compete in the open market. So, the goal is to help beginning farmers who compete in the open market to rent or purchase land to either start their operation or increase their land base.

At the federal level, the U.S. Department of Agriculture's Farm Service Agency (FSA), with its county and state offices spread across the country, has had beginning farmer loan programs for some time (through USDA's old Farmers Home Administration). With its new down payment loan program for beginning farmers and ranchers, 30 percent of the purchase price of the farmland is provided by FSA at 4 percent interest. Despite the limiting eligibility criteria, the program has been successful.

The Nebraska Investment Finance Authority (NIFA) helps young beginning farmers purchase land with low interest rate loans. In the past 15 years of the program, about 750 beginning farmers have been given loans. The average interest rate for a NIFA loan in 1998 was 1.0 to 1.5 percent lower than the commercial loan rate (Nebraska Farmer). This interest advantage is made possible through the sale of tax-exempt bonds, which allows

NIFA to pass the advantage on to the first-time buyers of agricultural real estate. This program is an excellent incentive for beginning farmers but the task of finding willing landowners to finance the sale and hold the paper on it is significant. Also, due to the Federal tax reforms in the mid and late 1980's, banks lost the incentive to use the NITA approach and hence the total loan volume is limited. Federally-tax exempt 'Aggie Bond' financing is practiced in as many as 20 states. Other state agricultural finance programs include loan guarantee programs to beginning farmers.

This leaves us with the beginning farmers who are interested in renting farm property but do not have family ties to get advantageous arrangements. The legislative bill, LB630 is aimed at assisting this beginning farm community by providing a state-level tax incentive to the asset owners.

Legislative Bill 630 was approved by the Governor of Nebraska on May 26, 1999. Understanding the economic hardships and financial hurdles faced by young farmers, the state of Nebraska has enacted this legislation to attract and retain young farm operators. The Bill provides a refundable credit for the individuals who qualify for an income tax credit under the Beginning Farmer Tax Credit Act for all taxable years beginning January 1, 2001. Nebraska is unique in enacting this type of legislation. North Dakota is the only other state with anything similar.

Under the Beginning Farmer Tax Credit Act, a resident owner of agricultural assets with at least 50 percent of his/her gross annual income from agriculture and a net worth of at least $100,000 is eligible to receive a state income tax credit of 5 percent of the gross rental income. The bill specifies that the owner should rent the assets on a share-rental basis to qualified beginning farmers or livestock producers in order to receive the credit. Also, the legislation limits the participation of the qualified beginning farmer to a three year share-rental agreement with the owner of assets who has been approved and certified by the Beginning Farmer Board.

For the purposes of the legislation, a qualified beginning farmer/livestock producer must:

• Be a resident of Nebraska
• Be actively involved in livestock/farming and seeking to make a livelihood in the sector.
• Have a net worth less than $100,000.
• Provide the majority of the day-to-day physical labor and management on the farm.
• Have adequate experience as deemed by the Board.
• Participate in a Board approved financial management educational program.
• Not be related to the owner of the assets.

The application of the criteria and the eligibility of owners and beginning farmers are solely determined by the Beginning Farmer Board to enact the legislation. The Board consists of:

• The Director of Agriculture or his or her designee
• The Tax Commissioner or his/her designee
• One individual representing lending community.
• One individual from academic community.
• Three individuals, one from each congressional district (based on the geographical location), who are engaged in farming/livestock operations.

The Beginning Farmer Tax Credit Act, LB 630 became effective on August 28, 1999. The Board was also authorized to conduct a study to ascertain the fiscal impact of future tax credits to owners of agricultural assets. The authors of this report accepted the responsibility of conducting the study.

In order to evaluate the economic impact of the program, estimating the potential number of qualified beginning farmers and asset owners who will participate and the average program cost for each owner-participant is essential. Since data on the net worth of farmers is unavailable (net worth of the individual is a binding qualification), alternative estimates needed to be developed. Data on the value of farm assets is available in census data and data on aggregate farm debt is published but data on net worth by farm size or age of operator is not available.

Jon Bailey with the Center for Rural Affairs (CRA) conducted a preliminary study to estimate the potential participants in the program as well as the cost of the program using two approaches (see Appendix I). The State Department of Revenue compiled an estimate of the qualified beginning farmers, based on the number of farm entries and exits during the period, 1992-1997 (see Appendix II). A brief review of these estimates helped us develop the methodology for our estimation procedures.

Cost and use estimate-I of LB-630 - By CRA:

The first approach taken by the CRA was to estimate the annual average tax credit per farm owner who participates. They made use of the 1997 Census of Agriculture data for their calculations. They estimated the return on farm assets at 5 percent. The average value of farm assets was $567,468, producing an expected return of $28,373. Applying the 5 percent allowable credit under the tax credit program produces an average credit per farm of $1,419. The next step was to estimate the number of potential qualified beginning farmers. Starting with the farmers, who are present on the farm for three years or less (2,275), other restrictions were sequentially applied to obtain the final estimate of the number of qualified beginning farmers. The exclusions include: farming as the principal occupation, exclusion of partnerships and corporations, and, exclusions resulting from farmers operating with ineligible family members (based on experience). Finally lower and upper bounds were placed on the estimates with a standard deviation of approximately 15 percent. Once the number of potential qualified beginning farmers is obtained, multiplying this number with the annual average credit per farm yields the total cost of the program implementation. While the final estimates are reasonable considering the data availability, we question the methodology used. First, limiting the selection of farmers based on the criterion that they should be on the farm for three or less years is misleading. The legislation limits the program participation to three years but does not directly limit the farmers who have been on the farm for more than three years. Second, the estimation procedure does not consider the possibility of breaking family ties to obtain eligibility into the program.

Cost and use estimate-1I of LB-630 - By CRA:

The second approach taken by the CRA was similar to the first approach but differs in the procedure used to obtain the annual average cost of credit per farm and the number of potential participants. Maximum annual credit per tenant farm was calculated at 5 percent of the total rent paid to non-operator landlords in 1997 ($40,385,000), divided by the 10,120 tenant farms in Nebraska. This yielded a maximum annual credit per tenant farm of $3,991. However, the actual usage was limited to 275 beginning farmers, using a similar approach that was used in estimate I. In this set of calculations, the total cost of the program is $932,525 (275 x $3,391).

Even though the cost of the program is approximately the same as the one achieved earlier, the per-participant cost is exaggerated because the estimating procedure are less consistent with the legislation and farm financial relationships. First, the per-participant cost estimation starts with the data on rent paid to non-operator landlords. But the legislation does not exclude operating landlords from participating as asset owners. In fact, the legislation requires that the asset owners earn at least 50 percent of his/her gross income from agricultural related activity and also spend considerable time in this activity. Second, the tax credit in the legislation is based on gross rental income and not on the number of tenants. So, an estimate based on the average rental income is a better measure to estimate the usage of the tax credit. Finally, the estimation procedure also assumes that the potential qualified beginning farmers are already tenants even though the legislation does not impose such a restriction. In fact, the purpose of the legislation is to encourage beginning farmers to become tenants with the help of the program.

Department of Revenue Estimate of Potential Participants:

The approach taken is an indirect one and tracks the sole proprietor farmers leaving and entering the industry between 1992 and 1997. The assumption is that the category of farmers who are younger than 65 years with gross annual income equal to or greater than $20,000 will represent the potential number of qualified beginning farmers. It is interesting to note that the average gross annual income in this group is close to $100,000 over the past five years and the average entry rate is 700 operators per year. Theoretically, all the farmers in this category who entered the industry during the past five years can be assumed to be potentially qualified beginning farmers. So, the number of potential qualified beginning farmers will be 3,500 (700 x 5). This number can be further narrowed down, based on non-related criteria. However the data to do this is inadequate so the Department of Revenue could not proceed further. Using the approach taken by the CRA in obtaining estimate-I of using an exclusion rate of 50 percent for family relations, the number of potential qualified beginning farmers would be reduced from 3,500 to 1,725. This is still a higher estimate than the CRA estimate. Although the category of farmers within the same age group with less than $20,000 income can be included in the total number of farmers, they are considered hobby farmers for obvious reasons.

North Dakota Experience:

Performance statistics received from North Dakota regarding their beginning farmer state income tax credit legislation revealed that only 36 farmers claimed the deductions in 1996 and 1997 combined. The claimed deductions, which reflect the cost of the program, were $211,564 and $267,722 for 1996 and 1997, respectively. Despite the fact that there are more farms in Nebraska than North Dakota, the percentage of young farmers who are less than 35 years of age is greater in North Dakota. This can be a slight downside factor for program participation in Nebraska.

University of Nebraska Analysis

A careful review and analysis of earlier studies and results helped us outline a methodology for our study. Our approach was to first develop a broad based estimate of the potentially qualified beginning farmers and asset owners using the 1997 Census of Agriculture data (Appendix III). The Farm Service Agency of USDA (FSA) was then asked to use our estimates as a baseline to validate, and correct our estimates, based on their experience in agricultural lending with beginning farmers. A total of 35 FSA Loan Managers were surveyed about the number of potential participants as well as their perception about the impact of the program (see the survey instrument in Appendix IV).

The response rate for the survey was 70 percent and covered 64 of the 93 counties in Nebraska. The survey asked the respondents to estimate the number of qualified beginning farmers and asset owners in their FSA loan area. They were also asked to estimate how many of these will actually use the program. The smaller of the estimates, for both the number of qualified beginning farmers and asset owners yielded an estimate of the potential participants in the program. Once the program use estimate was obtained, the total cost of the program was estimated using the approach used by the CRA estimate-I. The respondents' perceptions about the program's performance are summarized to emphasize the educational and advertising needs for successful program implementation. This is an interesting piece of research since quantitative interpretation of qualitative data is involved.

Estimated potential participation:
The survey results reflect the universe of potential qualified beginning farmers and asset owners, who meet all the criteria outlined in the legislation. Estimates are presented for all the 93 counties, out of which 64 were surveyed estimates and the rest are extrapolated (Appendix-V). The results show that there will be an estimated 940 qualified beginning farmers and 695 qualified asset owners in the state of Nebraska, who will take advantage of the program benefits. The estimate is in line with the CRA's cost and use estimate-I of an average of 898 participants.

Cost of credit per participant:
Assuming a 5 percent return on the average per farm value of Nebraska farmland and buildings will give an estimate of the average gross rental income for each asset owner. Five percent of this income will give the estimate of annual average credit per farm as per the provisions outlined in the legislation.

• Average per farm value of Nebraska farm land & buildings: -------- $567,468
  (Source: Census of Agriculture, 1997, USDA)
• 5% return on rental of average per farm value -------- $ 28,373
• Annual average credit per farm -------- $ 1,419
  (@ 5% of $28,373)

The Nebraska cropland rental survey provides data to compare with the rental income and tax credit estimates. The survey showed the average number of leased acres per lease by unrelated individuals in Nebraska as 215 acres (Cole, Table-3). Assuming 695 participants in the program, the total acreage would be 149,425 acres (695 x 215). The most recent survey of land values and rental rates show that the average cash rental costs in Nebraska are $125 for irrigated cropland and $60 for non-irrigated cropland. Assuming that 60% of the cropland rented is irrigated and 40% of the cropland is nonirrigated, the weighted average of the rental cost is $100 per acre. This will produce a rental income of $14,942,500 (149,425 x $100). This is slightly lower than the estimate of rental income using the return on assets approach, where the total rental income of 695 participants is $19,119,235 ($28,373 x 695).

Total cost of the program:
Considering the lower estimate of 695 participants in the program annually, the total cost of the program is $986,205. Based on the review of literature and the researcher's experience, a 15% deviation can be placed on the estimated cost of the program. So, the annual program can cost can range between $1,134,136 and $838,274 in terms of the deductions claimed by the tax payers enrolled in the program.

The final program cost estimates might look inflated at a first glance but the actual performance of the program depends on various factors like education, advertising, facilitation, and board's discretion.

Overall Program Effectiveness

As mentioned earlier, the FSA loan managers were also asked about their perceptions and opinions on the program performance along with suggestions for improvement. The qualitative responses are summarized as follows.

Program Facilitation:
The respondents were asked about the most effective method of establishing link between the owners and beginning farmers. Actual program performance will greatly depend on the publicity and awareness the program receives. The suggested advertisement and publicity measures are:

• Advertising in news papers
• Clearing house web site administered by the Beginning farmer board
• County local extension agents
• Center for Rural affairs land link program and news letter
• FSA news letter
• Creating a county-wise database on interested parties
• Fliers in coffee shops.
• Radio interviews

Suggestions for improvement of the pram in terms of attracting and retaining beginning farmers:
A majority of the respondents expressed that some of the eligibility requirements like 50% gross income from agricultural related activities, non-relatives, and mandatory training programs are restrictive. If the board allowed for a more lenient approach in deciding upon the eligibility, it will enhance the participation. Specific suggestions are:

• Expand the activities of NIFA
• Tax incentives to beginning farmers also
• Increasing farm profitability through international trade.
• Making the program less restrictive on the eligibility conditions

Perceptions about the programs attractiveness and performance:
Most of the respondents expressed that this legislation will greatly help the beginning farmers, if implemented with sincerely. The respondents who were not so positive about the program performance pointed it to the limiting eligibility criteria. Some of the issues raised are:

• Asset owner's willingness is the key to success
• Performance depends on the farm economy in the next decade.
• Eligibility criteria are conservative.
• Pasture rental may not fit into the program
• Beginning farmers might be reluctant to provide financial information
• Program long hoped for
• Program will be effective as long as the tax credit to renter is greater than the gain from increasing cash rents

How else could the state help?
The FSA loan managers were also asked about alternative measures that the state could take up to improve the situation for beginning farmers, that are not related to the tax credit program. The responses are as follows:

• Availability to direct funding
• Measures aimed at enhancing the standard of living for beginning farmers
• Tax reform that makes selling real estate for old farmers before death/retirement more attractive
• Share rental income should not come under the social security tax in the future
• Improve marketing opportunities
• Down payment assistance with real estate purchase

The following conclusions and observations are based on our analysis and work with beginning farmers.

Projected Participation and Cost of the Program:

1. Projected number of owners:      695
   Projected number of beginning farmers:      940
2. Projected cost as tax deductions:      $500,000 to $1,000,000 /year.

Recommendations:
To encourage participation in the program and enhance the likelihood that the objectives of the legislation will be achieved, we recommend the following operational actions:

1. Create an awareness of the program by highlighting the benefits and specifying the basic eligibility requirements. Work closely with agencies and organizations that have contact with beginning farmers such as the lending division of the Farm Service Agency (formerly the Farmers Home Administration) and the Center for Rural Affairs. Work with other lending institutions including commercial banks and the Farm Credit system to establish an understanding of the program.

2. As one method of achieving recommendation 1, we recommend the Board establish a web site. As some of the FSA loan managers suggested, the web site should be able to provide information content and activity reports apart from providing interactivity and feedback.

3. Use the discretion that is provided to the Board in the legislation to determine eligibility on a case-bycase basis. We understand the need to establish standards and specific eligibility guidelines but we encourage the Board to consider the worthiness of each applicant and the potential of each beginning farmer applicant to establish a successful long term farming operation. Often it is advisable to establish very specific operating procedures and regulations for government sponsored programs. Due to the lack of experience with a program of this nature and with the objectives it has, we recommend maintaining as much flexibility as possible.

Future Directions:
Once the program is operational, we recommend the following activities to enhance meeting the long-term goals of the legislation:

1. Monitor the success of each owner-beginning farmer arrangement. This will require more input by the parties involved but a base line could be established in the original application process. For example, ask applicants the following questions when they apply: How was the relationship between the two parties established? What were the key factors that helped the parties come to an agreement? Follow-up monitoring after an agreement is in place to determine satisfaction with the agreement and any impediments or difficulties would also be very helpful in directing the program in the future. This could possibly be done by telephone.

2. In reporting to the Legislature and particularly the Agriculture and Appropriations Committees, we recommend that the Board focus on how the objectives and philosophy of the legislation can be achieved and how the impetus can be maintained rather than just reporting the level of participation. The question of new entrants into agriculture is vital to Nebraska and we need to foster continuous dialogue on how this can be achieved. The Board has an excellent opportunity through the data and feedback it collects to take a very active leadership role in this discussion. We encourage the Board to seize that opportunity.

Bailey, M. Jon. "Cost and Use Estimates of LB-630," staff notes, Center for Rural Affairs, 1999.

Center for Rural Affairs. "Beginning Farmer Sustainable Agriculture Project Interim Report," A cooperative project between Farm Families, Center for Rural Affairs, Nebraska Sustainable Agricultural Society, and the University of Nebraska, 1994.

Cole, John. "Tables & Figures from UNL Cropland Rental Arrangement Survey," Mimeo, University of Nebraska-Lincoln, 1996.

Johnson, Bruce B. and Brandon G.Y. Raddotz. "Nebraska Farm Real Estate Market Developments, 19901999," Nebraska Cooperative Extension EC99-809, June 1999.

Nebraska Farmer. "Beginning Farmers Need Willing Owners for Program to Work," Nebraska Farmer, pp22, February 1998.

Valluru, Ram and Douglas H. Jose. "Part-time/Beginning Farmers: What do they have to say?," Project report for a grant project funded by Nebraska Network-21 and the Center for Rural Community Revitalization and Development, 1999.

I. Amount of Credit

A. Average per farm value of Nebraska farmland and buildings $567,468 Source: Census of Agriculture 1997 (USDA)

B. 5% return on rental of average per farm value $28,373

C. Annual average credit per farm $1,419 Source: IB x allowable credit ($28,373 x 5%)

II. Usage of credit

A. Number of Nebraska farmers on present farm 3 years or less 2,275 Source: Census of Agriculture 1997 (USDA) This figure represents 1,438 farmers on current farm 2 years or less and 837 farmers on current farm 3 years (half of the census category 3-4 years). This figure represents the universe of beginning farmers and ranchers in Nebraska, and is used as a proxy for beginning farmers and ranchers who may enter agricultural enterprises. Three years is used as the cutoff date because the credit allowed under LB 630 is limited to three years.

B. Number of beginning farmers or ranchers who are tenants 2,275 It is conservatively assumed that because of the high cost of owning an agricultural operation all beginning farmers and ranchers are tenants for at least a portion of their operation. Any beginners who are owners or part owners will reduce this figure, and hence reduce the total cost of the credit.

C. Percentage of Nebraska operators with farming/ranching as principle occupation (a condition of the credit) 80% Source: Census of Agriculture 1997 (USDA)

D. Number of beginning Nebraska farmers/ranchers with farming/ranching as principle occupation 1820 Source: IIB x IIC (2,275 x 80%)

III. Total Cost of Credit

A. Estimated maximum cost IF x IID ($1419 x 1820) $2,582,580

B. Modifications: Percentage of Nebraska farms organized in entities that would not qualify for the credit (partnerships, family corporations, etc.) 17.8% Source: Census of Agriculture 1997 (USDA)

C. Number of Nebraska beginning farmers/ranchers who would not qualify for credit due to operation in ineligible entities 324 Source: IID x IIIB (1820 x 17.8%)

D. Estimate of number of Nebraska beginning farmers/ranchers who would be farming with an ineligible family members (non-family corporation) High: 50% Medium: 33% Low:20% Source: Based on observations and experience with farm families

E. Number of Nebraska beginning farmers/ranchers who would be ineligible due to family operations High: 910 Medium: 602 Low: 365

F. Modified number of Nebraska beginning farmers/ranchers who would qualify for credit assistance Low: 590 Medium: 898 High: 1135 Source: IID - IIIC - IIIE (1824- 324 - 910/602/365)

E. Modified cost of credit Source: HID x IF (590/898/1135 x $1,419) $837,210 Low $1,274,262 Medium $1,611,984 High

I. Amount of Credit

A. Rent paid to non-operator landlords (1997) $807,700,000 Source: 1997-98 Nebraska Agricultural Statistics

B. 5% of A (available LB 630 credit for rent paid) $40,385,000 Note: LB 630 is based on share-rents rather than cash rents, but rent paid to non-operator landlords is the best available data on the amount of farm and ranch rents

C. Number of Nebraska farms (1997) 55,000 Source: 1997-98 Nebraska Agricultural Statistics

D. Percentage of tenant farms in Nebraska (1997) 18.4% Source: Census ofAgriculture 1997 (USDA)

E. Number of tenant farms in Nebraska (1997) 10,120 Source: IC x ID (55,000 x 18.4%)

F. Maximum annual credit per tenant farm $3,991 Source: IBAE ($40,385,000/10,120)

II. Usage of credit

A. Number of Nebraska farmers on present farm 3 years or less 2,275 Source: Census ofAgriculture 1997 (USDA) This figure represents 1,438 farmers on current farm 2 years or less and 837 farmers on current farm 3 years (half of the census category 3-4 years). This figure represents the universe of beginning farmers and ranchers in Nebraska, and is used as a proxy for beginning farmers and ranchers who may enter agricultural enterprises. Three years is used as the cutoff date because the credit allowed under LB 630 is limited to three years.

B. Number of beginning farmers or ranchers who are tenants 419 Source: IIA x ID (2,275 x 18.4%) The percentage of tenant farmers and ranchers for the entire universe of operators in Nebraska is imputed to the universe of beginning farmers and ranchers in IIA above

C. Percentage of Nebraska operators with farming/ranching as principle occupation (a condition of the credit) . 80% Source: Census of Agriculture 1997 (USDA).

D. Number of beginning Nebraska farmers/ranchers with farming/ranching as principle occupation 335 Source: IIB x IIC (419 x 80%)

III. Total Cost of Credit

A. Estimated maximum cost IF x IID ($3,391 x 335) $1,336,985

B. Modifications: Percentage of Nebraska farms organized in entities that would not qualify for the credit (partnerships, family corporations, etc.) 17.8% Source: Census ofAgriculture 1997 (USDA)

C. Number of Nebraska beginning farmers/ranchers who would not qualify for credit 60 Source: III) x IIIB (335 x 17.8%)

D. Modified number of Nebraska beginning farmers/ranchers who would qualify for credit assistance 275 Source: IIID - IIIC (335- 60)

E. Modified maximum cost of credit $932,525 Source: IIID x IF (275 x $3,391)

Table 1: Number. of Farmers (Soleproprietors) Leaving and Number of New Farmers Entering the Industry from 1992 through 1997.

Farm Characteristic:	1992	1993	1994	1995	1996	1997
Total Number of Farmers	59,512	58,384	57,117	55,494	54,292	52,158
65 years or younger number	49,604	48,382	47,074	45,474	44,339	42,380
gross income per farm, $	73,581	80,420	78,381	85,977	92,044	99,796
older than 65 years number	9,908	10,002	10,043	10,020	9,953	9,778
gross income per farm, $	40,914	45,371	42,405	47,084	52,632	55,057
Farmers Who Left the Industry: Gross Income less than $ 20,000.
65 years or younger number	3,536	3,521	3,459	3,298	3,525	na
gross income per farm, $	3,829	3,834	3,877	3,829	3,980	na
older than 65 years number	1,093	1,044	1,088	1,051	1,028	na
gross income per farm, $	5,396	5,553	5,506	5,308	5,324	na
Gross Income equal to or more than $ 20,000.
65 years or younger number	1,007	1,085	1,062	1,014	1,422	na
gross income per farm, $	90,299	100,378	98,510	105,710	140,193	na
older than 65 years number	331	347	354	369	431	na
gross income per farm, $	70,908	70,532	66,045	73,485	85,512	na
Farmers Who Entered the Industry: Gross Income less than $ 20,000.
65 years or younger number		3,580	3,500	3,128	3,272	3,055
gross income per farm, $		3,889	3,740	3,858	3,554	4,022
older than 65 years number		438	440	400	389	397
gross income per farm, $		4,178	4,338	4,496	4,506	3,751
Gross Income equal to or more than $ 20,000.
65 years or younger number		724	710	695	760	694
gross income per farm, $		91,128	89,513	103,456	103,912	101,661
older than 65 years number		97	80	117	109	126
gross income per farm, $		67,675	76,688	86,162	81,238	96,858

County	1-179 acres	<=$149,000	<= 10 yrs	<= 45 Yrs	Avg. Bg. Farmers	> 179 acres	> $149,000	> 10 yrs	> 45 yrs	Avg. owners
Nebraska	11870	11390	7187	12040	10622	23872	24353	22115	23702	23511
Adams	161	101	114	185	140	303	363	274	279	305
Antelope	189	157	117	232	174	419	450	378	376	406
Arthur	5	12	15	15	12	66	50	38	56	55
Banner	12	47	38	42	35	141	106	85	111	111
Blaine	18	25	27	32	25	86	79	56	72	73
Boone	185	205	109	234	183	395	375	371	346	372
Box Butte	70	133	81	113	99	303	240	221	260	256
Boyd	56	123	46	84	77	200	133	161	172	167
Brown	58	62	60	71	63	165	160	118	152	149
Buffalo	277	243	161	236	229	457	492	456	498	475
Burt	145	120	85	139	122	266	291	251	272	270
Butler	216	179	86	194	168	336	374	371	358	360
Cass	212	130	71	99	128	223	305	285	336	287
Cedar	249	214	141	326	233	455	489	442	378	441
Chase	49	50	45	86	57	214	213	155	177	190
Cherry	76	141	118	130	116	460	394	305	406	391
Cheyenne	75	122	72	117	96	400	353	310	358	355
Clay	115	117	84	163	120	293	293	255	245	271
Colfax	174	157	61	163	139	244	260	287	255	261
Cuming	306	219	149	289	241	434	520	463	451	467
Custer	246	342	211	308	277	686	589	558	624	614
Dakota	68	71	29	49	54	99	96	99	118	103
Dawes	66	112	72	74	81	248	202	185	240	219
Dawson	207	193	153	224	194	426	438	358	409	408
Deuel	29	42	35	35	35	137	124	109	131	125
Dixon	140	155	73	132	125	252	237	251	260	250
Dodge	218	155	92	181	161	328	391	376	365	365
Douglas	125	75	44	59	76	64	114	114	130	105
Dundy	42	87	46	68	61	207	162	164	181	178
Fillmore	133	99	75	179	122	346	381	309	300	334
Franklin	98	114	64	118	98	220	205	191	200	204
Frontier	45	76	47	91	64	243	213	191	197	211
Furnas	81	95	70	111	89	242	230	203	212	222
Gage	283	277	131	246	234	471	478	504	508	490
Garden	42	58	46	53	50	180	164	130	169	161
Garfield	39	71	25	33	42	101	69	83	107	90
Gosper	39	55	38	77	52	171	156	138	133	150
Grant	14	20	22	25	20	54	48	29	43	43
Greeley	83	95	61	94	83	206	193	181	195	194
Hall	195	129	95	174	148	263	329	267	284	286
Hamilton	140	86	99	198	131	356	410	309	298	343
Harlan	77	76	51	90	73	183	185	163	170	175
Hayes	28	59	29	58	43	164	134	131	134	141
Hitchcock	43	28	37	59	42	218	233	178	202	207
Holt	238	341	199	300	270	644	541	499	582	567
Hooker	10	19	18	16	16	55	46	36	49	47
Howard	147	169	106	156	144	317	296	279	308	300
Jefferson	133	127	71	138	117	289	295	274	284	285
Johnson	113	124	51	91	95	196	185	201	218	200
Kearney	111	73	79	148	103	284	323	246	247	275
Keith	70	86	62	75	73	189	173	136	184	171
Keya Paha	24	56	41	60	45	169	137	114	133	138
Kimball	31	62	38	60	47	178	147	128	149	151
Knox	126	180	85	150	135	292	237	260	268	264
Lancaster	413	276	161	199	262	257	394	411	471	383
Lincoln	192	197	136	196	180	431	426	353	427	409
Logan	25	47	28	27	32	82	61	53	80	69
Loup	22	41	33	44	35	92	73	59	70	74
McPherson	11	24	15	22	18	80	67	50	69	66
Madison	217	164	89	169	160	295	347	323	343	327
Merrick	144	118	83	141	122	243	269	226	246	246
Morrill	99	121	91	124	109	241	219	184	216	215
Nance	93	95	56	131	94	228	225	200	190	211
Nemaha	107	90	52	79	82	221	238	219	249	232
Nuckolls	88	129	64	129	103	258	217	223	217	229
Otoe	247	247	105	162	190	308	308	344	393	339
Pawnee	85	130	38	71	81	187	142	190	201	180
Perkins	76	70	53	114	78	283	290	230	245	262
Phelps	128	96	84	182	123	329	362	291	275	314
Pierce	174	152	95	186	152	307	329	305	295	309
Platte	266	163	124	303	214	448	549	451	411	465
Polk	160	112	78	172	130	297	345	305	285	308
Red Willow	90	94	68	109	90	213	210	183	194	200
Richardson	157	136	69	123	121	244	265	272	278	265
Rock	51	77	64	82	68	186	160	128	155	157
Saline	196	197	87	166	162	288	287	314	318	302
Sarpy	122	55	40	64	70	90	157	131	148	131
Saunders	358	231	140	274	251	427	554	496	511	497
Scotts Bluff	222	165	170	176	183	315	372	287	361	334
Seward	231	185	110	188	179	273	319	310	316	304
Sheridan	101	170	106	120	124	369	300	269	350	322
Sherman	102	110	72	112	99	241	234	208	231	228
Sioux	51	109	76	88	81	207	148	144	169	167
Stanton	160	165	81	135	135	227	222	237	252	234
Thayer	112	101	56	149	105	325	336	298	288	312
Thomas	8	14	17	20	15	52	46	32	40	43
Thurston	77	82	55	85	75	161	156	139	153	152
Valley	94	133	75	122	106	246	206	206	218	219
Washington	215	114	70	117	129	190	291	271	288	260
Wayne	163	106	85	169	131	263	318	274	256	278
Webster	94	99	58	86	84	182	177	170	190	180
Wheeler	31	46	44	43	41	100	85	70	88	86
York	172	95	120	211	152	387	465	362	348	390

Explanation of column headings
Columns 1-5 are estimates for beginning farmers; 6-10 are estimates of asset owners
Column 1 ( 1-179 acres) Beginning farmers with acreage less than 179 acres, with farming as principal occupation
Column 2 (<= $149,000) Beginning farmers with value of land and equipment less than $149,000, with farming as principal occupation
Column 3 ( <=10 yrs) Beginning farmers with less than 10 years farming experience, with farming as principal occupation
Column 4 ( <=45 yrs) Beginning farmers under 45 years of age, with farming as principal occupation
Column 6 ( > 179 acres) Farmers with more than 179 acres, with farming as principal occupation
Column 7 ( > $150,000) Farmers with value of land and equipment, greater than $150,000, with farming as principal occupation
Column 8 ( >10 yrs) Farmers with more than 10 years farming experience, with farming as principal occupation
Column 9 ( >45 yrs) Farmers over 45 years of age, with farming as principal occupation
Column 5 (Avg. Bg. Farmers): Average estimate of potential beginning farmers
Column 10(Avg. Owners): Average estimate of potential Asset owners.

List of counties in your loan office area:

Number of Qualified Beginning Farmers

1. Based on your experience and the census data that is presented in the attachment to this questionnaire, how many farmers do you think there are in your loan office area with net worth of less than $100,000?

2. How many of the those specified in question 1 do you think will take the initiative to rent land as a qualified beginning farmer, or rent additional land if already a renter, from a qualified land owner?

3. How many of those in question 2 do you think will actually negotiate a rental arrangement with a qualified land owner?

Number of Qualified Landowners

4. How many people do you think there are who own land in your loan office area have net worth over $100,000 and will be interested in taking advantage of the tax credits available in this program?

5. How many of those specified in question 4 do you think will actively pursue renting land to a qualified beginning farmer?

6. How many of those specified in question 5 do you think will actually enter into an agreement with a qualified beginning farmer?

Overall Program Effectiveness

7. What would be the most effective way to establish a link between land owners and beginning farmers or to facilitate bringing-the two parties together?

8. Do you have suggestions for other ways to make the program effective in terms of the goal of attracting and retaining beginning farmers.

9. What is your perception of how effective this program will be in achieving the goal of attracting and retaining beginning farmers?

10. Do you have suggestions of other ways the state could help beginning farmers?

Estimates of Potential Program Participants, From the Survey of Farm Service Loan Managers

Counties #	List of Counties	Column-1	Column-11	Column-111	Cotumn-V	Column-V	Column-VI
3	York, Polk, Filmore	85	404	20	100	1032	25
1	Gage	600	234	5	20	490	2
3	Adams, Webster, Franklin	20	322	1	1	689	1
3	Dawson, Gosper, Frontier	280	310	10	50	769	15
4	Red Willow, Hayes, Hitchcock, Dundy	100	236	20	100	726	20
3	Buffalo, Kearney, Sherman	100	431	20	1500	978	20
5	Blaine, Custer, Garfield, Loup, Valley	550	485	25	200	1070	25
7	Banner, Cheyenne, Kimball, Morril, Box Butte, Scottsbluff	759	550	10	15	1509	3
4	Cherry, Brown, Rock, Keyapaha	450	199	80	200	835	80
3	Antelope Holt, Boyd	200	521	50	100	1180	30
3	Boone, Greeley, Wheeler	100	307	25	25	652	10
1	Knox	140	135	50	200	264	25
2	Burt, Cuming	350	363	80	150	737	50
2	Cass, Otoe	100	318	25	300	626	25
3	Clay, Nuckolls, Hamilton	100	354	2	50	843	2
4	Johnson, Nemaha, Pawnee	375	258	100	300	612	80
2	Dodge, Washington	25	290	5	15	625	3
4	Dakota, Dixon, Thurston, Wayne	400	385	25	100	783	25
5	Lincoln, Logan, Mcpherson, Hoocker, Thomas	200	261	10	747	634	4
62	Totals	4934	6363	563	4173	15054	445
31	Extrapolated for other 31 counties	3303	4259	377	2344	8457	250
93	Grand Total	8237	10622	940	6517	23511	695

Explanation of Column Heading:

Column-I: Number of farmers with networth less than $ 100,000, for the counties listed.
Column-II: Average estimate of beginning farmers, from Appendix-III for the counties listed.
Column-III: Estimated qualified beginning farmers who will use the program in the counties listed.
Column-IV: Number of farmers with networth more than $ 100,000, for the counties listed.
Column-V: Average estimate of asset owners, from Appendix-III for the counties listed.
Column-IV: Estimated qualified asset owners who will use the program in the counties
listed.

Many Nebraskans have watched the numbers of farmers and ranchers decline over the years even though agriculture is one of their main sources of income. The average age of the Nebraska farmer has also increased at the same time. Together, these trends signify that many younger farmers and ranchers are leaving agriculture or are not choosing it as a career.

To help slow these trends, Senator Roger Wehrbein introduced LB 630 to provide a state income tax credit as an incentive for owners of agricultural assets to rent to beginning farmers or ranchers. The Beginning Farmer Tax Credit Act was passed by the Nebraska Legislature and enacted into law on August 28, 1999. The provisions of this act were revised during the 2000 session of the Nebraska Legislature in LB 1223.

According to the act, the Beginning Farmer Program is housed in the Nebraska Department of Agriculture for administrative and budgetary purposes only. The Board of Directors was appointed by Governor Johanns to develop and implement the program. Members of the first Board are Harry Knobbe, Gerald Timmerman, and Bill Zutavern, Nebraska producers representing each congressional district; Dale Pohlman, a lender of agricultural credit; Roy Frederick, a member of the academic community; Greg Ibach, Assistant Director of Agriculture; and Mary Jane Egr, Nebraska tax commissioner. Dale Pohlman, President of The Ravenna Bank, was elected chair and Harry Knobbe was elected vice chair at the Board's first meeting.

The Board of Directors are in the process of developing the program rules and regulations. Representatives from the University of Nebraska's Beginning Farmer Program, Center of Rural Affair's Land Link Program, the Nebraska Investment Finance Authority and others have contributed to the program development through coordination and collaboration with the Board.

Applications will be mailed to all requesting parties to be returned to the Board of Directors to determine eligibility for the program. The tax credit will be available starting in the agricultural asset owner's 2001 tax year.

               

Interest in the Beginning Farmer Tax Credit Act has been growing steadily. The Nebraska Department of Agriculture has received several calls from people who have heard about it in a newspaper story, radio interview, or from a booth at a show or conference. Others have been told about the program by Dave Goeller, with the University of Nebraska's Beginning Farmer Program, Joy Johnson, with the Center of Rural Affair's Land Link Program, and Dudley Beyer, with the Nebraska Investment Finance Authority (NIFA). This group effort has been very instrumental in notifying a large cross section of farmers and ranchers statewide to inform them about the Beginning Farmer Tax Credit Act.

The Beginning Farmer Program is still in the process of development and scheduled to begin the tax credit January 1, 2001. Therefore, applications have not been received or reviewed by the Board so there are no eligible Beginning Farmers or Owners of Agricultural Assets at this time.

The Assistant Director of Agriculture, Greg Ibach, and the Beginning Farmer Program Administrator, Marian Beethe, participated in an informal, roundtable discussion that was sponsored by Senator Merton Dierks and Senator Jim Jones on November 12, 1999 to discuss options available to facilitate arrangements between retiring and beginning farmers. Information about the Beginning Farmer Program was shared with the group.

The new logo, "Shared Strength - Build the Future" was used for the first time at the Governor's Conference on Agriculture on March 3, 2000. The new brochure was also available for the first time at the table of information. Many interested people visited with Marian Beethe and learned about the Beginning Farmer Tax Credit Act and what it could mean for them.

The USDA Advisory Committee on Beginning Farmers and Ranchers met in Kansas City on April 11 and 12, 2000. Marian Beethe attended as a guest to inform the committee of Nebraska's new Beginning Farmer Tax Credit Act and to learn of other states' activities and programs. It was an informative meeting and Nebraska's new Act was well received by representatives from other states.

The South Central Bankers met for their annual summer picnic on May 8, 2000. Marian Beethe explained the new Beginning Farmer Tax Credit Act and what it could mean for their customers to the group after their dinner. Questions were answered and other information and brochures were distributed.

Marian Beethe met with the people who attended the Gateway Farm and Dairy Exposition in Kearney, NE, on May 18-20, 2000, in the Nebraska Department of Agriculture's booth. The booth was located in the main aisle so all attendees had an opportunity to receive the handouts and information that was given to the interested farmers and ranchers.

Date	Magazine, Newspaper or Radio Station	Headline	Reporter or Writer
October 1999	Nebraska Farmer Magazine	Beginning Farmer Law Now Effective	Roy Frederick
October 1999	Beginning Farmer News and Notes	Rent to a Beginning Farmer, Receive a Tax Credit	Wyatt Fraas Martin Kleinschmit
November 1999	KRVN Radio	Interview with Beginning Farmer Board President, Dale Pohlman, for "Inside Agriculture" program	Mike La Porte
January 2000	Progressive Farmer Magazine	FARMERS FOR A NEW CENTURY	Dan Miller
March 14, 2000	Kearney Hub Newspaper	Banker invests in beginnings: Pohlman's board helps beginning farmers get started	Betty Kuszak
April 18, 2000	KRVN Radio	Interview with Beginning Farmer Board President, Dale Pohlman	Rex Messersmith
June 21, 2000	Nebraska Radio Stations	Interview with Marian Beethe, Program Administrator	Sara Grell, Public Information Officer, Nebraska Department of Agriculture

Administration:    The Beginning Farmer Board is created in the Beginning Farmer Tax Credit Act. The Board is housed within the Nebraska Department of Agriculture, Administration Division, State Office Building, 301 Centennial Mall South, Lincoln, Nebraska 68509. Telephone: (402) 471-2341.

Revisions:    The provisions of this Act were revised during the 2000 session of the Nebraska Legislature, LB 1223. This Act was initiated during the 1999 session of the Nebraska Legislature, LB 630. Section 77-2715.07 is included for informational purposes. The income tax credit in this section is referred to in the Beginning Farmer Tax Credit Act.

Rules:    The Nebraska Department of Agriculture has no authority to promulgate regulations under this Act. The Beginning Farmer Board, however, is authorized to promulgate regulations.

77-5201. Act, how cited. Sections 77-5201 to 77-5214 shall be known and may be cited as the Beginning Farmer Tax Credit Act.

77-5202. Legislative findings. (1) The Legislature hereby finds and declares that:

(a) Current farm economic conditions in the State of Nebraska have resulted in unemployment, outmigration of people, loss of agricultural jobs, and difficulty in attracting and retaining farm operations; and

(b) Major revisions in Nebraska's tax structure are necessary to accomplish economic revitalization of rural Nebraska and to be competitive with other states involved in economic revitalization and development of agriculture.

(2) It is the policy of this state to make revisions in Nebraska's tax structure in order to encourage persons to seek careers in the farming industry, retain existing and established farm operations, promote the creation and retention of new farm jobs in Nebraska, and attract and retain investment capital in rural Nebraska.

77-5203. Terms, defined. For purposes of the Beginning Farmer Tax Credit Act:

(1) Agricultural assets means agricultural land, livestock, farming, or livestock production facilities or buildings and machinery used for farming or livestock production located in Nebraska;

(2) Board means the Beginning Farmer Board created by section 77-5204;

(3) Farm means any tract of land over ten acres in area used for or devoted to the commercial production of farm products;

(4) Farm product means those plants and animals useful to man and includes, but is not limited to, forages and sod crops, grains and feed crops, dairy and dairy products, poultry and poultry products, livestock, including breeding and grazing livestock, fruits, and vegetables;

(5) Farming or livestock production means the active use, management, and operation of real and personal property for the production of a farm product;

(6) Financial management program means a program for beginning farmers or livestock producers which includes, but is not limited to, assistance in the creation and proper use of record-keeping systems, periodic private consultations with licensed financial management personnel, year-end monthly cash flow analysis, and detailed enterprise analysis;

(7) Owner of agricultural assets means:

(a) An individual or trustee who (i) is a resident individual as defined in section 77-2714.01, (ii) in the case of an individual, has derived at least fifty percent of his or her gross annual income for income tax purposes from farming or livestock production, or in the case of a trustee, the trust has derived at least fifty percent of its income for income tax purposes from farming or livestock production, (iii) has provided the majority of the day-to-day physical labor and management of a farm over a period of time deemed sufficient to qualify for the granting of tax credits under the act by the board, and (iv) has other such qualifications as determined by the board;

(b) A partnership (i) which has at least one general partner that is a resident individual as defined in section 77-2714.01, (ii) which derives at least fifty percent of its income from farming or livestock production, and (iii) in which one or more partners have provided the majority of the day-to-day physical labor and management of a farm over a period of time deemed sufficient to qualify for the granting of tax credits by the board; or

(c) A corporation or syndicate qualified to own agricultural land under Article XII, section 8, of the Constitution of Nebraska; and

(8) Qualified beginning farmer or livestock producer means an individual who is a resident individual as defined in section 77-2714.01, who has entered farming or livestock production or is seeking entry into farming or livestock production, who intends to farm or raise crops or livestock on land located within the state borders of Nebraska, and who meets the eligibility guidelines established in section 77-5209 and such other qualifications as determined by the board.

77-5204. Beginning Farmer Board; created; duties. For the purpose of developing and directing programs to provide increased and enhanced opportunities for beginning farmers and livestock producers, the Beginning Farmer Board is created. For administrative and budgetary purposes only, the board shall be housed within the Department of Agriculture. The board shall be vested with the following duties and responsibilities:

(1) To approve and certify beginning farmers and livestock producers as eligible for the programs provided by the board;

(2) To approve and certify owners of agricultural assets as eligible for the tax credits authorized by sections 77-5211 to 77-5213;

(3) To advocate joint ventures between beginning farmers or livestock producers and existing private and public credit and banking licensed institutions, as well as to advocate joint ventures with owners of agricultural assets desiring to assist beginning farmers and livestock producers seeking entry into farming or livestock production;

(4) To provide necessary and reasonable assistance and support to beginning farmers and livestock producers for qualification and participation in financial management programs approved by the board;

(5) To advocate appropriate changes in policies and programs of other public and private institutions or agencies which will directly benefit beginning farmers and livestock producers and may include changes regarding financing, taxation, and any other existing policies which prohibit or impede individuals from entering into farming or livestock production;

(6) To provide adequate explanations of facts and aspects of available programs offered or recommended by the board intended for beginning farmers and livestock producers;

(7) To assist and educate beginning farmers and livestock producers by acting as a liaison between beginning farmers or livestock producers and the Nebraska Investment Finance Authority;

(8) To encourage licensed financial institutions and individuals to use alternative amortization schedules for loans and land contracts granted to beginning farmers and livestock producers;

(9) To refer beginning farmers and livestock producers to agencies and organizations which may provide additional pertinent information and assistance;

(10) To provide any other assistance and support the board deems necessary and appropriate in order for entry into farming or livestock pr