How are Illinois farmers retiring? Not like they used to.
In years past, a big health concern might have ended an older farmer’s career. Today that’s less likely to happen, and instead we see farmers phasing out of their operations over two or three years, giving up a few more leases and acres every year.
A typical progression of a farm operator retirement includes first letting go of high-cash-rent leases or lower-productivity farms. The next year, they might give up crop-share leases. Then after that, they could fully retire from owned acres. This strategy has many positive tax implications and benefits. But it wasn’t as desirable during the days of planting with an open cab tractor, finicky planter row markers and individual bags of seed.
As a consequence, we see fewer older farmers transitioning leases to a new generation. And by the time they do transition, the age of those farmers they’re transitioning land to is also older. These older beginning farmers typically have a stronger financial position than a young farmer straight out of school, and they often have better decision-making abilities from several years of experience working an off-farm career. Some of these older beginning farmers continue to work their off-farm jobs, especially those jobs that are complementary to their farming operations.
Good times are giving older farmers more incentive to keep farming, thanks to the dramatic increase in crop prices over the last few months and last fall’s great tillage opportunities. The memories of a difficult 2020 growing season faded quickly with the prospects of a new and profitable year ahead.
Less turnover, please
Farm managers value long-term relationships with farm operators and obviously, turnover decreases as farmers continue to work into their older years. We build a level of familiarity and trust over time, and we know there’s no guarantee those relationships will continue into the next generation, or with a new tenant. Farm managers and landowners recognize that new young farmers (as opposed to older beginning farmers) may not have as much experience or financial strength compared to an older farmer.
Many landowners are also averse to tenant turnover and appreciate hearing that their farm operator can continue to operate for more years. As long as productivity remains high, the farm is maintained well and the tenant remains actively involved, most landowners aren’t concerned about their tenant’s age.
Farm managers and landowners a like frown on subleasing or other arrangements, where the primary tenant is no longer actively involved in the farming operation. As farmers age, everyone needs to communicate well about exactly what is going on: What tasks does the landowner expect the farm operator to perform? What tasks can be delegated to a family member, employee or custom operator?
In the coming years, we’ll see continued aging of the farmer population, with strategic retirement dates planned out well in advance. And, the successor farmers to many of these operations will continue to be older and well-established in their own right.
Wyss is a farm manage and VP at Heartland Bank, Normal, Ill., and is a member of the Illinois Society of Professional Farm Managers and Rural Appraisers. Email questions to [email protected].
The opinions of this writer are not necessarily those of Farm Progress/Informa.