Source: Center for Agricultural and Rural Development, Iowa State University
AMES, Iowa — As the average age of Iowa’s farmland owners continues to rise, other trends in landownership have begun to emerge.
According to an Iowa State University study, 58% of Iowa’s farmland is now leased out, a significant increase from the last time the same study was conducted in 2017.
“There is a long-term trend toward farmland leasing since 1982,” said Wendong Zhang. Zhang is an assistant professor of economics at Cornell University and conducted the Iowa Farmland Ownership and Tenure Survey with Jingyi Tong, a PhD student in the Department of Economics at Iowa State. “The percentage of farmland being leased in Iowa increased from 53% in 2017 to 58% in 2022. This represents a relative increase of roughly one million acres over five years, which is quite significant,” Zhang said.
Conducted by Iowa State since the 1940s, the Iowa Farmland Ownership and Tenure Survey–completed every five years–focuses on forms of ownership, tenancy and transfer of farmland in Iowa, and characteristics of landowners. The latest survey was conducted in July 2022, and was funded by Iowa State’s College of Agriculture and Life Sciences, Iowa Nutrient Research Center, Leopold Center for Sustainable Agriculture, Department of Economics, Center for Agricultural and Rural Development and Iowa State University Extension and Outreach.
Farmland leases also increasingly favor cash rent over crop sharing and owner-operating arrangements. In 2017, 82% of leased farmland was cash rented, but cash rent, predominantly fixed-cash rental contracts, now account for 87% of leased land.
“The rise of cash rent, especially fixed cash rent, correlates with the growing percentage of landowners who are part-time and non-residents of Iowa,” said Wendong Zhang. “Fifty-five percent of land is owned by an owner who did not farm in 2022, and, of them, over half do not have farming experience. Especially for those landowners, a fixed cash rental contract is a natural choice,” Zhang said. According to the study, 47% of farmland was directly operated by the landowner in 2017, but that number has now fallen to just 42%.
The survey found that the average age of Iowa’s farmland owners is still increasing. In 1982, only 29% of Iowa farmland was owned by those over the age of 65. That percentage has steadily increased over the years, totaling 60% in 2017 and 66% today. Tong noted that women own 46% of Iowa’s farmland, and they hold a larger share among senior owners.
Tong indicated several factors are contributing to the increasing age of Iowa’s farmland owners, including the increase in using farmland as an inheritance or long-term investment, fewer young people going into farming, and those young farmers facing large start-up costs. “Also, some senior farmers may retain ownership of their land due to a lack of succession planning, thus keeping the farm even if they aren’t actively farming. The survey shows 17% of landowners neither have a successor for ownership or management,” Tong said.
However, Tong noted that survey results show three of every four landowners in Iowa are interested in selling land to beginning farmers when incentivized with federal and state tax credits. “At the same time, over half of Iowa landowners expressed concerns about difficulty finding quality beginning farmers as well as beginning farmers’ ability to pay the best prices for land,” Tong said.
The recent survey also reveals changing trends in how ownership of Iowa’s farmland is held. In 1982, 80% of Iowa’s farmland was owned through a combination of sole ownership and joint tenancy; however, those now only account for 52% of Iowa farmland ownership. Meanwhile, the amount of farmland held in trusts has skyrocketed from 1% in 1982 to 23% today.
“Trusts have grown in popularity due to their numerous benefits. Particularly for farmland owners, trusts can ensure the preservation of the farm within the family, manage land transitions, and potentially provide tax benefits, making them a valuable tool in succession planning,” said Zhang.
The percentage of farmland owned debt-free has also continued to increase–84% of Iowa farmland is held without any debt, the highest level observed. This represents a steady and significant increase from 1982, a year that marked the onset of the farm debt crisis, when only 62% of the land was held without debt. Tong said that some of that recent increase is due to the hike in commodity profits, aging landowners coupled with longer lengths of ownership, and government payments during the COVID-19 pandemic.
Zhang said that the survey also found interesting trends in the use of conservation techniques on Iowa farmland. He noted that no-till farming saw a significant increase from 21% of owners and 27% of acres in 2017 to 29% and 30%, respectively, in 2022. “The use of cover crops also saw a slight increase over this period, from 5% of owners and 4% of acres in 2017 to 7% for both owners and acres in 2022,” he said. However, only 2% of Iowa landowners have already participated in a carbon credit program and another 3% are considering doing so, but, Zhang said, “most landowners are either not interested or have never heard of them.”
More information about the 2022 Iowa Farmland Ownership and Tenure Survey results can be found on the CARD website at https://www.card.iastate.edu/. For over 60 years, the Center for Agricultural and Rural Development at Iowa State University has conducted innovative public policy and economic research on local, regional, and global agricultural issues, combining academic excellence with engagement and anticipatory thinking to inform and benefit society.