Who Buys and Rents Iowa s Farmland

Transcription

1 Who Buys and Rents Iowa s Farmland Dr. Wendong Zhang Assistant Professor of Economics and Extension Economist 2015 Integrated Crop Management Conference, Iowa State University, Ames, IA

2 A Quick Introduction: Dr. Wendong Zhang Well, No one could replace Dr. Mike Duffy Something about me Grown up in a rural county in NE China Attended college in Shanghai and Hong Kong Ph.D. in Ag Econ in 2015 from Ohio State 2012 summer intern at USDA-ERS on farm economy and farmland values Research and extension interests: land value, land ownership, agriculture and the environment, China Ag

3 Ag Real Estate Investment Trust Source: Denver Post, DTN, WSJ, AgTax.com

4 Farmer s Interest Still Strong - Sioux County Sale Nov 27, 2015 $17,300/acre 154 Acre, CSR2 = 100

5 WHO PURCHASED in Iowa 90% Percentage of farmland 80% 70% 60% 50% 40% 30% 20% 10% 0% Farmers Investors New Farmers Other Source: Mike Duffy

6 TOTAL 2014 Tenure, Ownership and Transition of Agricultural Land Goal: Landlord Profiles An integrated survey of farm finance (ARMS) and land ownership (TOTAL) TOTAL adds land use, owner attributes, land transaction and decision making for ALL agricultural landowners operators and nonoperators Source: Allison USDA ERS

7 Why Now? AELOS preceded TOTAL Agricultural Economics and Land Ownership Survey (1979, 1989, 1999) Latest AELOS data are 15 years old! TOTAL will update AELOS, and add new questions on current farm sector issues Source: Allison USDA ERS

8 Why Care about Farmland Ownership? 3,500.0 Distribution of U.S. Farm Assets 3, ,500.0 Billion $ 2, , , F Real estate Livestock and poultry Machinery and motor vehicles Crops stored Purchased inputs Financial assets Source: USDA ERS

9 Landlords profiles not fully/directly covered Percent of Farmland Leased or Rented 2012 U.S. average: 38.8% Source: USDA NASS 2012 Census of Ag.

10 What States Do TOTAL Cover? Source: USDA ERS

11 Who own the land and land rented out?

12 Iowa Landlords by Ownership Arrangements - # Landlords Operator vs. Non-operator Landlords 2014 Percent of Landlord Iowa Midwest US Non-operator landlord Operator landlord Source: USDA NASS TOTAL

13 Iowa Landlords by Ownership Arrangements - # Landlords Operator Landlords 4.10% 1.80% 19.40% 12.90% Individual Partnership Trust Corporation 16.20% Other 46.50% Source: USDA NASS TOTAL

14 Iowa Landlords by Ownership Arrangements - # Rented Acres Corporation, 5.3 Other, 3.1 Operator Landlord, 23.2 Trust, 23.9 Partnership, 14.4 Total acres rented out in Iowa, 2014: million acres more than 50% of Iowa Farmland. Individual, 37.0 Source: USDA NASS TOTAL

15 US Land in Farms by Ownership 2014 Source: USDA NASS TOTAL

16 Owner-operated and rented farmland by ownership, by region, 2012 Source: USDA NASS TOTAL USDA ERS

17 Distribution of Iowa Farmland Acres by Land Ownership Type % 90% 80% Percent of Farmland Acres (%) 70% 60% 50% 40% 30% 20% 10% 0% Sole owner Joint tenancy Tenancy in common Partnership Estates Trusts Corporations LLC Government/institution Source: Ag DM PM1980

18 Distribution of Iowa Farmland Acres by Tenure % 90% 80% Percent of farmland acres (%) 70% 60% 50% 40% 30% 20% 10% 0% Year Owner-operated Cash rent lease Crop share lease Other type of lease Source: Ag DM PM1980

19 Distribution of Iowa Leased Farmland by Types of Leases % 90% Percentage of Leased Iowa Farmland 80% 70% 60% 50% 40% 30% 20% 10% 0% Cash rent Crop share Other Source: Ag DM PM1980

20 Distribution of Iowa Leased Farmland by Types of Leases and Ownership % 90% Percentage of Leased Farmland 80% 70% 60% 50% 40% 30% 20% 10% 0% Cash Rent Crop Share All Rented Sole owner Joint tenancy Tenancy in common Partnership Life estate Unsettled estate Trust Corporation LLC LLP Limited partnership Source: Ag DM PM1980

21 Economics of Land Ownership

22 Rent, Expense, Asset, Debt by Landlord Ownership Types 2014 Rent Expenses Value of Land Total Debt Received and Buildings Operator Landlords Non-operator Landlord Individual & Partnership Corporation & Trust Other Multiple* Iowa Total Illinois Total Midwest Total U.S. Total , Source: USDA NASS TOTAL

23 % Total Rent by Landlord Ownership Arrangements Operator Landlords Individual & Partnership Corporation & Trust Other Multiple* 22.5 Total Rent Received in Iowa 2014: $3.7 Billion 48.1 Source: USDA NASS TOTAL

24 % Total Expense by Landlord Ownership Arrangements Operator Landlords Individual & Partnership Corporation & Trust Other Multiple* Total Expense in Iowa 2014: $0.84 Billion 47.6 Source: USDA NASS TOTAL

25 % Total Ag Real Estate Value by Landlord Ownership Arrangements Operator Landlords Individual & Partnership Corporation & Trust Other Multiple* 23.4 Total Value of Land & Buildings in Iowa 2014: $ Billion 49.5 Source: USDA NASS TOTAL

26 Rent Expense Asset Debt per Landlord in Iowa 2014 Value per Landlord ($) All Landlords Operator Landlords Non-operator Landlord Individual & Partnership Corporation & Trust Rent Received Expenses Value of Land and Buildings ($ 1000) Total Debt ($ 10) Source: USDA NASS TOTAL

27 Method of Finance % 90% 80% Percent of Farmland Acres 70% 60% 50% 40% 30% 20% 10% 0% Year Free of debt Under contract Mortgaged Source: Ag DM PM1980

28 # Farms, Acres, Prod Value by Farm Type 2011 in the U.S. Residence Farm = Under $350,000 GCFI & non-farm occp. Mid-Size Farm = $350,000-$999,999 GCFI Very Large Farm = $5,000,000 or more GCFI Intermediate Farm = Under $350,000 GCFI & farm occp. Large Farm = $1,000,000-$4,999,999 GCFI Non-Family Farms = Any farm not operated by owner. Source: USDA ERS ARMS 2011

29 Distribution of Production Value across Commodities (US 2011) Source: USDA ERS ARMS 2011

30 Farms by Operating Profit Margin and Farm Type 2011 Residence Farm = Under $350,000 GCFI & non-farm occp. Intermediate Farm = Under $350,000 GCFI & farm occp. Mid-Size Farm = $350,000-$999,999 GCFI Large Farm = $1,000,000-$4,999,999 GCFI Very Large Farm = $5,000,000 or more GCFI Non-Family Farms = Any farm not operated by owner. Source: USDA ERS ARMS 2011

31 How Did Iowa Landlords Acquire Their Land?

32 Acquisition of Land by Landlord Types 2014 Operator Landlord (percent) Non-operator Landlord (percent) All Farmland (percent) Purchased from non-relative Purchased from relative Purchased at auction Inherited or received gift Obtained some other way Total Total Acres Rented Out 3,786,869 12,546,625 16,333,494 Source: USDA NASS TOTAL

33 16,000,000 Acquisition of Land by Landlord Types ,000,000 12,000,000 Number of Acres 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Purchased from nonrelative Purchased from relative Purchased at auction Inherited or received gift Method of Acquisition Obtained some other way Operator landlord Non-operator landlord All farmland Source: USDA NASS TOTAL

34 % Acquisition of Land by Landlord Types % 90% 80% Percent of Acquisition 70% 60% 50% 40% 30% 20% 10% 0% Operator landlord Non-operator landlord All farmland Purchased from non-relative Purchased from relative Purchased at auction Inherited or received gift Obtained some other way Source: USDA NASS TOTAL

35 Demographics of Iowa Landlords

36 % of Farmland by Age and Life Stage of Owners 100% 90% 80% 70% Percent of Farmland 60% 50% 40% 30% 20% 10% 0% Year < > 74 Source: Ag DM PM1980

37 % of # Landlords and # Acres by Age and Life Stage % 30% 25% Percent 20% 15% 10% Owners Acres 5% 0% < > 74 Early stage Early stage Mid stage Mid stage Mid stage Late stage Late stage Age and Life Stage Source: Ag DM PM1980

38 % of # Landlords and # Acres by Age and Life Stage % 50% Percent of farmland acres 40% 30% 20% 10% 0% < to 64 > 65 Year of financing and age Debt free Contract Mortgage Source: Ag DM PM1980

39 Putting Aging Farming Population into Perspective Source: Carl Zulauf, Census of Ag.

40 Putting Aging Farming Population into Perspective Source: Carl Zulauf, Census of Ag., BLS

41 Distribution of Farmland by Highest Education Level % 90% 80% Percentage of Farmland Owned 70% 60% 50% 40% 30% 20% 10% 0% < High school High school Some post high school BS, BA, etc. Graduate degree Source: Ag DM PM1980

42 Distribution of Farmland by Gender and Age % 30% Percentage of Farmland Acres 25% 20% 15% 10% 5% 0% < >65 Males Females Source: Ag DM PM1980

43 Distribution of Farmland by Farming Status of Owners % 90% Percentage of Iowa Farmland Owned 80% 70% 60% 50% 40% 30% 20% 10% 0% Full-time farmer Part-time farmer Do not farm Source: Ag DM PM1980

44 Anticipated Transfer of Iowa Farmland

45 Anticipated Transfer over the next 5 years ( ) Numbers on top of columns show the percentage of farmland acres in corresponding categories 7.7% 8.7% Farmland Acres % 10.7% 10.1% 8.6% All Acres Rented Out Acres Rented Out by Non-operator Landlord All Farmland Put or keep in will Total to Transfer

46 % of Farmland Expected to Transfer in the Next Five Years, by Region, 2015 Source: TOTAL 2014

47 % of Farmland Acres that will be transferred in 5 years 100% 90% Percentage of All Acres to Tranfer in 5 Years 80% 70% 60% 50% 40% 30% 20% 10% 0% All Acres Rented Out Acres Rented Out by Non-operator Landlord All Farmland Put or keep in a trust Sell to a non-relative Gift Sell to a relative

48 Method of Anticipated Transfer % 90% 80% Percentage of Farmland 70% 60% 50% 40% 30% 20% 10% 0% Will to family Will to others Give to family Give to others Sell to family Sell to others Put in trust Other

49 Beginning Farmers and Farm Transition

50 Share of Beginning Farms in the US 2011 Beginning Farmers: < 10 years of farming experience 38% in % in 2007 Source: USDA ERS ARMS 2012

51 Age Distribution of US Beginning Farmers vs. Established Farmers 2012 Beginning farmers: < 10 years of farming experience Source: USDA ERS ARMS 2012

52 Value of Production: Beginning vs. Established Farmers Beginning farmers: < 10 years of farming experience Source: USDA ERS ARMS 2012

53 Source of Household Income: Beginning vs. Established Farmers Beginning farmers: < 10 years of farming experience Source: USDA ERS ARMS 2012

54 Thank You! Wendong Zhang Assistant Professor and Extension Economist Iowa State University