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Corn+Soybean Digest

Landlord Shock | Farmers Learn New Perspectives From Next-Generation Landlords


Farmers aren't the only ones getting older. Forty-two percent of non-operating landlords (NOLs) were more than 70 years of age in 1999*. As control of rental property shifts to the next generation, long-term tenant relationships can shift, too.

When the children of one of Dale Hess' landlords turned management of the property over to a farm manager, it came as a shock to the Chaska, Minn., farmer.

"We had always had a good working relationship, with rent going up with the cost of living," says Hess. "The dad was strict, but he was fair too. Suddenly, a stranger walks in and says the rent is going up $60/acre, and the full rent needs to be paid up front in March, rather than split in May and October."

Ironically, it was a problem with another parcel and tenant, not the one farmed by Hess, that introduced the management change. The family brought in a farm manager to represent them in dealing with a disagreement. When the farm manager suggested he represent them on all three parcels the family owned, they agreed to try it for a year.

In Hess' case, his old landlord stepped in and suggested to the younger generation and the farm manager that the rent be lowered slightly to reflect a $50 increase. As part of the deal, Hess would provide a few bales of straw for use as mulch on a small orchard on the property. Hess acknowledges that rent has increased significantly around the Midwest. His frustration with the increase is less the amount than the suddenness.

He advises tenants strive to get to know the next generation in any landlord relationship. All too often, he suggests, that generation is removed from the land and lacks an understanding of how it has been cared for over the years.

"As tenants, we try to do a good job all the way around, taking care of waterways and such," says Hess. "As a renter, it's for our own good, as well. Other farmers and landlords in the area are always watching how you care for the land."

In his case, getting to know all his landlords and their children time consuming. Hess lives on the edge of the Minneapolis/St. Paul metropolitan area. Over the past 30 years, many once-small farms have been split into hobby farms. Hess and his brother Tony work with as many as 25 landlords. Rental parcels range from under 10 acres to 120 acres. Some of these relationships are long-standing, formal lease arrangements, while others are less formal.

"We make hay on some properties where they don’t want row crops, but simply want the fields kept up," says Hess. "We had a guy drive in to a field we were baling and tell us he had 10 acres of hay and nobody to bale it. He asked if we wanted it."

Working with a farm manager isn't all bad, admits Hess. He notes that a long-standing suggestion to the landlord regarding a wet spot in a large field be tiled was received more favorably by the farm manager when viewed in light of increased land value.

"It will be nice to get that spot dried out," says Hess. "Of course, we'll end up paying for it with higher rent."



Aging landlords spell change

Landlords factor when considering the current increase in land values and future sales is the age of the landowner. Although national data has limitations, it provides ample

Landlords continue to age, according to a variety of data. The percentage of Iowa farmland owned by someone over 65 years of age increased from 29% in 1982 to 55% in 2007 (Duffy and Smith, 2008).

More recent studies in Iowa and elsewhere support the findings that farmland is increasingly being held in the hands of the elderly.

A 1999 USDA national study, in conjunction with the 1997 Census of Agriculture, discussed the age structure of American farmland owners. The study found that 28% of the owners with 29% of the land were over 70 years of age. In comparison, a similar report in 1988 using 1987 Census data reported 25% of the owners were over 70 years of age. In just one decade there was a 3% increase in the percent of farmland owners over 70 years of age.

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