Farm and Ranch Access and Tenure

posted July 23, 2009

there are some good findings here, courtesy of the University of Vermont’s FarmLASTS program.

P1020234

Farm and Ranch Access and Tenure: Draft Research Summary

Ownership

  • About two-thirds of the country’s farm asset wealth is held in real estate. Farmland ownership is concentrated; four percent of owners hold nearly half the land.
  • Agricultural land is increasingly in the hands of older owners (60 + years), with owners under 35 accounting for an increasingly smaller proportion. Fewer young people are entering into farming, and of these even fewer are able to purchase their own land to farm.
  • Seventy percent of farmland will change hands in next 20 years. Women owners are increasing; they may own up to 3/4 of farmland transferred in the next 2 decades.
  • Absentee ownership is increasing. Eighty-eight percent of farm landlords are not farm operators. Of all farm landlords, over 60% are over the age of 60 and 40% are over 70 years old. They own 44 percent of the nation’s farmland.
  • Investor ownership is increasing. In 2002, 34 percent of farmland owners in Iowa were investors, double the proportion in 1989.
  • In Western regions, water rights are integrally connected with land rights and must be considered in tandem. Water rights are treated similarly to rights to real property, and can be conveyed, mortgaged, and encumbered in the same manner.

Acquisition

  • Farm real estate values more than doubled from 2002-2008. In some areas, values are nearly ten times the national average.
  • Cost, competition and availability of land are major challenges for most beginning farmers as is finding suitable property. Housing availability and costs are also obstacles for many entrants.
  • Government subsidy programs inflate the cost of land. Much of the increase in government payments accrues to landlords in the form of higher rents.
  • Socially disadvantaged populations face additional challenges acquiring farmland. These include persistent discrimination, cultural and language barriers, and fractionated heir property.
  • Fewer entrants acquire farms from family members; more entrants come from non-farm backgrounds. “Traditional” succession —passing from older to younger generation within the family through purchase, gift, or inheritance—accounts for only about half of farmland acquisitions.
  • Despite government loan programs, many beginning farmers report not being able to secure loans for real estate. Only 3 percent of land buyers were new farmers.

Tenancy and Landlords

  • Tenancy has always constituted a significant percentage of farm tenure. Since 1950s there has been an increase in partial and full tenancy. Full ownership tends to be more associated with smaller farms.
  • Farm tenancy not inherently bad. Under the right conditions, farm rental can offer beginning and other farmers a flexible, lower-cost alternative to purchasing land.
  • Nearly one-third of principal operators rent some or all the land they farm. In general, young farm entrants generally own fewer acres than they rent.
  • From 2000 to 2008, national average cash rents for cropland increased by 37 percent.
  • Nationally, eighty-eight percent of farm landlords are non-operators, owning 40% of U.S. farmland. They are a varied demographic including: public (Federal, state, county, municipality; private (absentee and resident non-farming, widows and daughters, socially conscious and other investors); and institutional (religious, educational, intentional communities, land trusts) owners. The vast majority of land transfers and farm succession will happen in the private sector.
  • Most rental agreements are short-term, usually annual. At least a third are verbal, and there is a strong culture and bodies of law regarding oral leases . Short-term agreements are inherently insecure and discourage investment. Cash leases are three times more common than share leases, with the proportion growing.