Valley children struggle when family farm falls to them

Rui Medeiros eagerly awaits the day his 22-year-old son, Brian, will take over their 2,200-head dairy in Hanford.

But Medeiros, 48, knows that his son faces huge odds -- because of low milk prices, tighter government regulation and urban encroachment. And his son had to wrestle with whether it made sense to follow in his father's footsteps -- or stay in college and become an accountant.

"The plan is to have him come back and try and keep this running," said Medeiros, a Portuguese immigrant. "But it's going to be tough for this new generation."

It's always been a challenge to pass on a family farm or ranch. Low prices, high operating costs, tighter lending and estate taxes have made the task even tougher in recent years. And these days, young people have options for different careers, something their parents generally lacked.

Initiatives to help new farmers have helped, but the recession and -- in the valley -- uncertain water supplies have made it tougher for some to gain a foothold. The uncertainty has been enough to drive some in the younger generation away from agriculture at a time when the nation's farmers are getting older. Just 2 percent were younger than 35 in 2007, down from 16 percent in 1982.

"If we don't have new people to farm, we are talking about the potential for further industrialization in agriculture and a greater reliance on global forces to supply our food," said Kathryn Ruhf, an organizer of the FarmLASTS Project, a federally funded effort to help new farmers.

The project is developing federal policy recommendations to make it easier for people to access land and help families with succession planning.

Groups such as California FarmLink also help transfer family farmland to the next generation and help new farmers find property. One way that group helps is by holding seminars to walk families through the legal and accounting realities -- or even just to bring family members to the table to talk about what can be a touchy topic.

And the U.S. Department of Agriculture's loan program for new farmers and ranchers has seen an uptick in activity. Young farmers often need loans to start a farm, buy it from their parents or pay estate taxes.

"As farmers get older, we are seeing more and more finding it harder to keep their operations going and keep their sons and daughters involved in farming," said Val Dolcini, executive director of USDA's Farm Service Agency in California. "We used to be the lender of last resort, and now we are trying to be the lender of first opportunity."

Statewide, the number of USDA loans to beginning farmers rose to $38.9 million in 2009, up from $27.5 million in 2006.

Making a living uncertain

But finding capital is only one of the hurdles the new generation of farmers must overcome.

Narrow operating margins in some segments of agriculture make coming back to the family farm difficult.

In the Kern County foothill community of Glennville, Nathan and Nancy Carver are at least a decade away from retiring, but that hasn't stopped them from talking with their children about the future of the family's 4,000-acre, 250-head cattle ranch.

Although wealthy in land, the Carvers aren't rich. They work second jobs to make ends meet. He builds fences for other cattle ranchers, and she sells Avon products.

"It is difficult farming on a small scale, and our children understand," Nancy Carver said. "They will have to think of new ways to do things or expand, and that will take money."

Although the Carver children all have jobs of their own, each has talked about someday returning to the ranch. But they are not sure it can support them financially.

Esther Delahay, the Carvers' 24-year-old daughter, agrees that cattle ranching must remain the operation's main focus. "I know this won't be easy," said Delahay, a director at Youth for Christ in downtown Fresno.

"But that ranch means so much to all of us. It is part of our history, and we want to keep it in the family."

For other new farmers, supporting themselves is only part of the problem.

At J&L Vineyards in Easton, the looming prospect of paying hefty estate taxes could slow the transition to the new generation.

Family patriarch Don Laub died last year, and his wife, Clara, died this year. Their grandson, Ryan Jacobsen, 30, represents the next generation for the family-run operation that produces table grapes, wine grapes and raisins.

Jacobsen, who also heads the Fresno County Farm Bureau, said he would like one day to help run the farm, but the estate-tax issue could derail those plans.

In general, the estate tax could add hundreds of thousands of dollars in costs for some farming families. For 2011, the tax applies to all businesses, although the first $1 million in value is exempt.

After that, the tax rate is 55%. It is applied when property changes hands after a death.

"At its worst, we may have to sell part of our farm just to pay the tax," Jacobsen said.

"And we don't know what that will mean for the next generation that wants to be part of that operation. Will there be enough land left to make a livelihood?" On his Hanford dairy, Rui Medeiros likes the idea of his son inheriting the dairy that he began 16 years ago.

But he's also practical and insisted that he get a college education, in case things don't work out.

"The way this business is going, you never know what will happen," Medeiros said. "I want my son to be ready to come back and try and keep this dairy running, but if not, I know that he will be prepared to do something else."

Had Medeiros not had any heirs, he would have sold the dairy several years ago.

Brian Medeiros graduates from Cal Poly in December with a double major in agricultural business and dairy science. The younger Medeiros acknowledges thinking long and hard about coming back home.

"I thought, should I really stay in school and get my master's degree or be a CPA?" he said. But the lure of running his own dairy and following in his father's footsteps was stronger.

"The truth is, I hate the idea of sitting in an office, and I like working with my hands," Medeiros said. "To me, farming is one of the last honest ways of making a living."

In some families, however, there is no clear successor willing to take the risks now associated with farming.

For 30 years, Doug and Edith Henderson lived a tidy life, farming 22 acres of walnuts near Exeter.

But the family's plans changed after Doug passed away this year at the age of 79. Now, the Henderson family is the process of deciding the fate of the family's walnut ranch.

Henderson's son Mark, a computer consultant in Visalia, said a few younger nieces or nephews could fill the role of walnut farmer. One of Henderson's nephews is majoring in agriculture at Fresno State.

But the orchard's aging trees and low production have reduced the farm's profits, making it difficult to provide a living for any of Henderson's children.

"I think it is too early to decide who will continue to farm it," Mark Henderson said. "And if nobody does it, I will."

The family hired a ranch manager to take care of the property several years ago, and Edith Henderson, 77, does all she can to help.

"I am going out to count the spaces that need trees and see about getting some new ones," Edith Henderson said. "I am just trying to plan ahead, for the next generation."