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You cannot assume landowners know what you’re talking aboutYou cannot assume landowners know what you’re talking about

More than Dirt: New Iowa land ownership survey contains valuable takeaways for landowner-tenant relationships.

Mike Downey

June 9, 2023

3 Min Read
Farm fields
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There were a lot of interesting takeaways yesterday during the press conference for the new Iowa farmland ownership and tenure survey. One quote which resonated with me and my line of work:

“You cannot assume your landowners know the lingo you’re talking about,” says Iowa State University economist Wendong Zhang. “They may not be reading the same ag publications you are.”

Zhang shared his key takeaways from the 2022 land ownership survey which has been occurring every five years dating back to 1982.

Perhaps not surprisingly, Iowa farmland owners are getting older, and more live outside the state. Thirty-seven percent of Iowa farmland is now owned by those 74 years or older. In 1982, this demographic only owned 12% of farmland.

Zhang says investor interest is rising with investors now purchasing nearly 30% of all farmland offered for sale. This is up from 20% just a few years ago. A total of 55% of farmland is owned by those who do not farm. Of these, one-half do not have any farm experience.

A shocking 31% have never heard of carbon credit programs.

According to the survey:

  • 20% of all acres in Iowa are owned by non-Iowa residents

  • 58% of all acres are leased, up from 53% in 2017

  • 32% of all acres are controlled by owner-operators, down from 37% in 2017

Education gap

These facts illustrate a dilemma we see as more and more farms transition and are purchased by those with no farm experience. As an industry, we need to be aware of these trends and look for opportunities to educate those in the next generation how to manage their farm investment and the responsibilities that come with farmland ownership.

Cash rent leases continue to rise due to the reduction in owner-operated farms and crop share leases. Of the 58% of farms that are leased out, 42% are under a fixed cash rent lease.

One concern we see is the trends in the farm leasing industry do not complement many of the soil loss reduction initiatives in the industry. Despite all these initiatives and coverage in ag publications, only 7% of the acres in Iowa use cover crops and 30% no-till conservation practices.

An encouraging trend? Income is not necessarily the primary driver for farmland ownership. More and more cite reasons such as long-term investment and for family and sentimental reasons. This supports the trend we see for more flexible cash rent lease arrangements, which in our opinion better complement some of these land ownership goals as well as land stewardship and conservation initiatives.

In some regions of Iowa, upwards of one-third of the cash rent agreements are now handled with some type of variable cash lease.

When asked what they intend to do with their land, one-half say they plan to will or gift it to family. There is also a growing trend towards restructuring land ownership to revocable living trusts or land entities such as limited liability companies. These are effective tools to minimize administration costs and to better complement long-term farm continuation goals.

Young farmer opportunities

An interesting outcome was also presented from the question asked of landowners: “Would you be willing to sell to a hard-working young farmer?”

  • 75% stated they would at fair market value

  • 40% stated they would also consider a discounted sale price

Lastly, comparisons are often made in our industry to what occurred during the farm crisis of the 1980s. However, 84% of Iowa farmland is owned debt-free. Of the two-thirds of Iowa land owned by those 65 years or older, a total of 90% to 95% is owned free of debt.

Downey has been helping farmers and landowners for the last 23 years with their family farm transition, estate planning, leasing strategies, and general farm advising. He is the co-owner of Next Gen Ag Advocates and an associate of Farm Financial Strategies. Reach Mike at [email protected].

Read more about:

FarmlandLand Rental

About the Author(s)

Mike Downey

Co-Owner, Next Gen Ag Advocates

Mike Downey is co-owner of Iowa-based Next Gen Ag Advocates and an associate at Farm Financial Strategies. His passion for helping farmers and landowners stems from his own farm roots, growing up on his family’s grain and livestock farm near Roseville, Ill.

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