Half an hour from downtown Kansas City, Joe Lau runs his fingers over the leaves of his young soybean crop, 24 acres of which he has planted in this field and which should be ready for harvest in about a month and a half.

Lau is a first-generation farmer. He decided to try his hand at running his own agricultural holding about 12 years ago.

Today, he leases several hundred acres of land in northwest Missouri where he grows soybeans and corn, but he says it was difficult to find land at first.

“I can’t even count how many times I was turned down when I first started out when I approached someone about leasing a farm,” says Lau.

A new Tax deduction program in Missouri aims to encourage older farm owners to hand over land to newbies. The new policy allows qualified owners to deduct income from renting or selling their property to young farmers from their state-adjusted gross income.

The program is part of a growing initiative in the Midwest and Great Plains to help new farmers get started as they face high prices for land and equipment.

About 1 million of the 3.4 million farmers in the United States are novice farmers or those who have been farming for 10 years or less, according to the last census from the U.S. Department of Agriculture. And one of the biggest challenges for this growing group is access to land, said Denice Ferguson, a field specialist in Agriculture and agricultural policy for the expansion of the University of Missouri.

“There is really little farmland,” Ferguson said. “Land prices are astronomical. Farmland, if it is anywhere near an urban area, is competing with development and often the land is almost unaffordable for a young farmer.”

Meanwhile, the average age of farmers across the country has risen to about 58. Lau said many farmers are worried about the land change.

“If so many people still own land at the age of 70, how is the other one going to step in and make a seamless transition?” Lau said. “And that’s always the biggest problem, the transition from one generation to the next.”

Promote transitions

Several states, including Illinois, Kansas, Nebraska and Iowa, have their own incentive programs to encourage land transfers to younger farmers. These efforts include loans for young farmers – a program that Missouri has and tax credits. But Missouri’s new program is one of the first to offer tax deductions.

Under the new program, Missouri farm owners who enter into qualified rental, lease or crop-sharing agreements with young farmers can deduct the amount of annual income they receive from that agreement, up to $25,000 per tax year.

For qualified property sales, an owner can deduct the first $2 million of capital gain on the sale from his or her federally adjusted gross income. For capital gains above that amount, the deductible percentage gradually decreases.

Lau no longer qualifies for this young farmer program, but he was intrigued when he heard about its launch. He believes older farmers may be more willing to partner with less established farmers if they can take advantage of tax breaks.

“To get to the first $2 million without paying capital gains tax,” Lau said. “That’s impressive.”

Although the program is still in its early stages, Ferguson said it could be groundbreaking – especially if similar deduction programs are introduced in neighboring states such as Kansas, Iowa and Nebraska.

“The whole idea is a win-win situation for the young farmer and the landowner,” Ferguson said.

The need is there, says Kristine Tidgren, professor at Iowa State University and director of the Centre for Agricultural Law and Agricultural TaxesMissouri is not the only state facing the challenges young farmers face despite access to credit programs, she said.

“Because you’re a young farmer, you may not be able to pay as much as someone who is outbidding you because they’re an established farmer,” Tidgren said. “And they may be able to afford to pay a little more for access to that land than even a young farmer’s lender would guarantee them.”

Iowa offers both Loans and tax credits for young farmers for farmers leasing to new producers. But Tidgren said Missouri’s new deduction is a welcome addition to statewide efforts to help young farmers overall.

“We need them as replacements because our current farmers will not be able to farm forever,” Tidgren said.

The situation is similar with David Howard of the National Coalition of Young Farmers said that these types of measures are a step forward, especially when it comes to improving access for underrepresented groups in agriculture.

“This is an important policy area and I’m glad that the states are thinking about it and trying to figure out what might work,” Howard said. “I think we really need federal policy on land access that sets the tone and creates space and investment for all the work that needs to be done.”

Lau hopes that the new program will encourage landowners to work with novice farmers in the future and that it will help secure the future of agriculture.

“I would just encourage the people with those resources, the landowners, to consider a young farmer when they’re taking on leases,” he said. “Even if it’s not just for the tax benefits, but just to bring some fresh blood into farming.”

This story was created in collaboration with Harvest public mediaa collaboration of newsrooms from public media in the Midwest covering food systems, agriculture and rural issues.