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SUNDAY, OCTOBER 19, 2014
WSJ 3
... Farmers Won’t Tell You
As ‘Big Ag’ replaces the small
family farm, is the consumer better off?
counts more than 610,000 members under age 21, up 23% since
2005. Kristy Meyer, a spokeswoman for FFA, says its members go into 300 related career
paths, from food sciences and
veterinary medicine to agricultural communications.
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‘We’re a big business…’
City slickers and suburbdwellers may not realize it, but
two-fifths of all land in the U.S.—
some 915 million acres—is devoted to farming, according to
the U.S. Department of Agriculture. U.S. farms are expected to
bring in almost half a trillion
dollars in revenue this year, as
they feed hundreds of millions of
people at home and abroad.
At the same time, that farmland is concentrated in fewer
hands. The number of individual
farms and ranches dropped from
6.8 million in 1935 to 2.1 million
in 2012. And most production
happens on large farms: In 2012,
the biggest 0.5% of farms—those
that sold more than $5 million
worth of goods—accounted for
32% of the total value of agricultural products sold. In contrast,
the bottom 75% accounted for
only 3% of sales.
For some smaller farmers,
farming has become so costly
that they’ve turned their properties into tourism centers, relying
on “agritainment” to stay profitable. Steve Paproski, a third-generation farmer in Newtown,
Conn., sold off his cows in 2006,
after a long, steady decline in the
price of milk. “It was a no-win
situation,” Mr. Paproski says.
“It’s really hard for any farmer
to stay in business.”
Today, Paproski’s Castle Hill
Farm offers corn-maze tours, hay
rides and pumpkin picking. It
even rents out chickens for children to play “backyard farmer.”
‘We’re throwing away perfectly good food.’
Nearly one-third of U.S. food
supply goes to waste each year,
according to the USDA, some as
uneaten leftovers, and some lost
to pests, mold and climate disasters.
But each year, farms dump
about six billion pounds of perfectly edible produce in the
trash, according to the nonprofit
Feeding America. Often, it’s
thrown away because it doesn’t
meet retail standards: Plenty of
farm food isn’t pretty enough to
sell (picture the bruised peach)
or is the wrong size to fit packaging.
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5
‘…but farmers are getting
harder to find.’
Just 6% of farmers are under
age 35, while 33% are 65 or
older, according to the USDA.
But while traditional farm jobs
may be dwindling—in part because of technological improvements—there are plenty of other
agriculture careers drawing
young people. The National FFA
Organization (founded in 1928 as
Future Farmers of America)
‘Just because you’re paying
more doesn’t mean we’re
getting rich.’
Grocery-store prices are up
2.3% compared with a year ago.
But farmers’ production costs
are also rising, and crop prices
can be volatile. Farms’ net income is expected to fall by 13.8%
this year to $113.2 billion, the
lowest since 2010, according to
USDA forecasts.
Consumers’ higher costs often
represent the costs of convenience—in the form of, say, a
pre-chopped salad, or pre-cut
chicken strips. Much of the premium they pay goes toward processing, not into the pockets of
farmers, says John Anderson, a
chief economist with the American Farm Bureau Federation,
which lobbies the government on
agricultural issues.
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‘We’re also in the entertainment business.’
When Mr. Paproski, the Connecticut farmer, sold his cows in
2006, his family was devastated.
But Castle Hill Farm has made
things a little cheerier: School
groups of about 40 kids visit the
farm every weekday.
Agritainment has become a
big enough business to spawn,
yes, consultants. White Hutchinson, in Kansas City, Mo., has
Mark Brewer
BY PRIYA ANAND
helped at least 25 farms develop
agricultural tourism programs.
“I can charge somebody $10
to go through a corn maze, then
I can still harvest it,” says CEO
Randy White.
‘Farmers-market produce
isn’t always farm-fresh.’
More than 8,000 farmers
markets operate nationwide,
serving the local-food craze. But
some less-than-scrupulous vendors have been caught attempting to pass off supermarket produce as their own.
In California’s Los Angeles
County—home to more than 150
certified farmers markets—the
county agricultural commissioner’s office issued 72 violation
notices to vendors over the past
year for transgressions like selling products they didn’t grow.
according to the Organic Trade
Association, with food representing about 90% of that market.
Meeting the USDA’s organiccertification guidelines, which involve minimizing synthetic fertilizers and using natural farming
methods “to the fullest extent
possible,” is labor-intensive, and
that drives up the cost of organic
products. Organic foods cost 85%
more than conventional items on
average, according to the National Sustainable Agriculture Information Service.
Although many consumers are
willing to pay that premium,
there’s still considerable debate
over the health benefits. A recent Stanford University study,
for example, found little evidence that organic foods are
healthier or carry fewer health
risks than nonorganics.
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‘Organic farming? It mostly
serves the rich.’
Organic product sales in the
U.S. reached $35 billion in 2013,
‘And so do our tax subsidies.’
The U.S. began granting
farmers tax subsidies during the
Great Depression to help them
stave off failure. But some critics
say that today, those subsidies
pad the earnings of many farm
owners who don’t need the help.
Between 1995 and 2012, the
federal government granted
about $256 billion in subsidies.
Much of that total wound up going to larger commercial farms,
rather than smaller family operations, according to the nonprofit
Environmental Working Group,
and at least $11.3 million went to
farms or businesses owned by
billionaires.
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‘We’re big in China.’
U.S. agricultural exports
have more than doubled since
2006, to more than $140 billion,
according to the USDA. And
China, which has nearly 1.4 billion mouths to feed, imported almost $26 billion of U.S. agricultural products, a 1,400% increase
since 2000.
Some Chinese consumers are
washing down that food with
U.S. wines. China imported just
$1.3 million of wine and wine
products from the U.S. in 2000.
That number climbed to $77.3
million last year.
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‘We’re loading your food
with pesticides.’
The U.S. uses about 877 million pounds of pesticides annually on agriculture, to protect
crops from things like insects,
rodents and mildew, according to
the Environmental Protection
Agency. While many have been
deemed safe if used at the appropriate levels, pesticides come
with plenty of risks: Some could
be carcinogens, disrupt hormones or even result in death,
the EPA warns.
Apples, strawberries, grapes
and celery top the list of the
most pesticide-laden foods, according to the Environmental
Working Group. The EPA says
people can reduce their pesticide
consumption by washing fruits
and vegetables under running
water.
YOUR BENEFITS
The Advantages to Retiring Single
BY JENNIFER WATERS
You may be
raising a glass
to 40 years of
marriage when
you officially
retire, but the
Internal Revenue Service won’t
be celebrating with you.
Instead, federal tax laws favor retired folks who are single
if they have income outside of
Social Security benefits—a statute that prompts some couples
to divorce at retirement.
You will be taxed on as
much as 85% of your Social Security benefits if your combined income exceeds certain
limits. In Social Security’s
arithmetic, “combined income”
is the sum of your adjusted
gross income and nontaxable
interest plus one-half of your
annual benefit.
The combined-income ceiling
on two singles is higher than
for married couples filing
jointly. For married couples on
tight, fixed incomes, the tax hit
when filing jointly could be consequential. And don’t think you
can be married and file separately to avoid the marriage tax.
In that case, the agency warns,
“you probably will pay taxes on
your benefits.”
Individuals may face taxes on
up to 50% of their benefit if the
combined income is between
$25,000 and $34,000, and up to
85% if that threshold is above
$34,000. Identical percentages
apply to combined income limits
for joint returns at $32,000 to
$44,000, and above $44,000.
As a result, an unmarried
couple living together and filing separately can have a
higher combined income level
of $50,000 to $68,000 before
getting whacked with higher
taxes.
Q:
If you continue work after 70 and earn greater
than $50,000, how does Social
Security work? I have heard
that the amount of the Social
Security check is deferred and
then added to the payment
you receive when you stop
working.
—Susan D., Dallas
A:
For starters, once you
reach your full retirement
age (FRA), which is 66 for those
born from 1943 to 1954, you will
get your full benefit no matter
how much you earn. So if your
A Language of Its Own
Deciphering some of the Social Security Administration’s
mind-numbing jargon and abbreviations.
! AIME (Average Indexed Monthly
! FICA tax (Federal Insurance
Earnings): The dollar amount used to
Contributions Act): The tax withheld
calculate your Social Security benefit.
from your salary or self-employment
Past earnings are adjusted using an
income that funds Social Security and
“average wage index” to keep the values Medicare programs.
! FRA (Full Retirement Age): The age of
of past earnings (when money was
worth more) in line with present
entitlement to full or unreduced benefits.
earnings.
It is gradually rising from age 65 until it
reaches 67 for workers and spouses in
! Benefits: Social Security pays five
2027 and for widows and widowers in
types of benefits: retirement, disability,
2029. The increase affects the amount
family, survivors and Medicare.
of reduction if you take benefits early.
! COLA (Cost of Living Adjustment):
! GPO (Government Pension Offset):
Social Security and Supplemental
Reduces Social Security spousal or
Security Incomes payments may
widow and widower benefits by
automatically increase annually to keep
two-thirds of the amount of the earner’s
pace with the cost of living, or inflation.
individual public pension.
! DRC (Delayed Retirement Credits):
Social Security benefits are increased by ! Number holder: In many Social
Security Administration documents,
8% (if born after 1943) if you delay
this refers to the wage earner.
taking retirement benefits beyond your
! SSA (Social Security Administration):
full retirement age. The increases stop
after age 70, even if you continue to
The government branch that administers
delay benefits.
the Social Security program.
Source: ssa.gov
income exceeds $50,000 at age
70, your benefit is all yours.
What you’re referring to is
the earnings test that applies to
those younger than FRA who
are collecting benefits and still
working. In those cases, SSA deducts $1 from benefits for every
$2 earned above a threshhold
that for 2014 is $15,480.
If this is the year you reach
your FRA, SSA pushes the income limit to $41,400 and deducts $1 for every $3 earned in
the months before your birthday.
(There is a special rule that applies the year you retire if your
earnings top the limit but you
are retired for part of the year.)
As for the deferment, this is
one of those rare cases when
you can raise your monthly benefit, which was reduced from
FRA disbursements because it
was taken early. Once you reach
retirement age, your monthly
benefit climbs, taking into account those months in which
your benefits were reduced because of the earnings test.
Q:
My wife will be 65 in December and I am 62. My
wife filed for Social Security
retirement benefits after her
62nd birthday. I want to wait
until 70 to take a benefit.
However, if I lose my job and
cannot find another, will I be
eligible to file for a spousal
benefit? What would that be?
—Bill Heptig,
Prior Lake, Minn.
A:
The short answer is yes,
you can file for a spousal benefit even now. But remember this: If you file for a
spousal benefit before you
reach your full retirement age
of 66, Social Security considers you an early filer and
computes your own retirement
benefit as well as your
spouse’s.
If your own retirement benefit is higher than your spousal benefit, Social Security
will pay your retirement benefit—and it will be at a permanently reduced rate. (The
spousal benefit amount is
based on your age when you
file.)
If you wait until after your
FRA to file, you can file a restricted application for your
Social Security benefits, which
will insure that your own benefits are growing while you
collect spousal benefits. You
will receive 50% of her full
benefit and can switch to your
own, higher benefit at 70.
If you can work until you’re
70, you may file and suspend
your own benefits at your
FRA. Should you change your
mind about waiting until 70,
you can collect a lump-sum
back payment to age 66 by
“unsuspending.”
Please send questions with your
name, phone number and city to
[email protected]. I can respond only in the column.
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