Farmland ownership: What are the implications for conservation, the next generation?

By MICHAEL DUFFY, Iowa State University Extension Economist

There continues to be keen interest in just who owns Iowa’s productive farmland and what changes are ahead in the next few years. My ongoing study examining farmland ownership here and around the country has produced three key observations about ownership trends, the implications of these ownership patterns and possible future directions.

Age
The first observation is that the age of the farmland owner is increasing at a rapid rate. In Iowa, the percent of land owned by people over the age of 75 has risen from 12 percent in 1982 to 27 percent in 2007. The percent of land owned by people between 65 and 74 has increased from 17 percent to 27 percent. This means that more than half the farmland in Iowa is owned by someone over the age of 65.

Figure 1 combines data sets to give a rough idea of what has happened to th age of landowners over time. These data come from three different sources, university and private. (Please contact me for more specific information on the data and the sources.) This figure shows that approximately 15 percent of the land in Iowa was owned by people over 65 from 1900 through 1930. Then we see a rather steady increase in age of landowners through 1976. There is a drop between 1976 and 1982, but I think this was due to a change in definition from percent of owners to percent of land owned. Since 1982 there has been a steady increase in the percent of land owned by people over 65 years of age.

The increasing age of Iowa’s landowners reflects two phenomena. One is that people, including landowners, are living longer in general. A second occurrence has been the impact of technology in agriculture. Advances in technology have allowed people to farm longer and as a result they need to farm more acres to generate an adequate income from the farm.

Another factor, coupled with the increasing age of landowners, has been the increasing percent of land owned by people who do not live in Iowa. Some of these people truly are non-Iowans, but many of them are the heirs of the farmers who have since moved on to other places. The percent of Iowa farmland owned by non-Iowans has risen steadily from 6 percent in 1982 to 21 percent in 2007.

Rental patterns
A second observation concerns the change in land rent patterns over time. Figure 2 shows the percent of land rented in Iowa. The overall percent of land rented has changed little over time (except for the Depression era). However, the distribution of rented land by county reveals considerable differences from one location to another.

Figure 3 presents the percent of land rented by county. Notice the range in percent of farmland rented goes from 20 percent in Decatur County to 67 percent in both Grundy and Hamilton counties.

Today in Iowa almost half (48 percent) of farmland is farmed by 20 percent of the farmers, who rent between 50 and 99 percent of all the land they farm. Modern agriculture has led to a situation where almost half the land is farmed by people who rent more than half the total land they farm.

Effects on conservation
So what does this mean for conservation and the future of agriculture in Iowa? The increasing age of the landowning group is a situation that likely will continue until an equilibrium of sorts is reached. As the population ages, the group of landowners will, too, and as older owners eventually pass on, their offspring usually inherit the land. But, the offspring will, for the most part, also be older. Almost two-thirds of the farmers indicate that the family will inherit their land and another 18 percent say the land will be put into a trust.

One of the changes that we will see is that a greater percentage of land will be owned by people who don’t live in Iowa. The heirs to Iowa farmland increasingly are scattered around the country. Therefore, we should expect an increase in multiple land ownership with some of the owners living out of state.

Finally, there will be an increase in rented land due to the land ownership structure changes and the requirements of large-scale farming. Recent studies have shown that farmers are likely to use the same short-term conservation practices on rented or owned land, but are less likely to invest in long-term conservation practices (such as terraces) without adequate guarantees they will be compensated for the expenses.

Land is unique among financial assets. For some, it is simply an investment and source of income. For others, it represents their heritage or legacy. And, for others, the land holds an almost religious connotation. Regardless of how people feel about land, land ownership patterns in Iowa are changing and these changes are likely to accelerate in the future as the general population demographics change.

EDITOR’S NOTE: Michael Duffy, who has issued the annual Iowa Land Values Survey for the past 24 years, has been conducting additional research on land ownership in Iowa and nationally. His research has been funded by Iowa State University and the Leopold Center’s Policy Initiative.

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Farmland ownership: What are the implications for conservation, the next generation?