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
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
Ag Real Estate Investment Trust Source: Denver Post, DTN, WSJ, AgTax.com
Farmer s Interest Still Strong - Sioux County Sale Nov 27, 2015 $17,300/acre 154 Acre, CSR2 = 100
WHO PURCHASED in Iowa 90% Percentage of farmland 80% 70% 60% 50% 40% 30% 20% 10% 0% 1989 1992 1995 1998 2001 2004 2007 2010 2013 Farmers Investors New Farmers Other Source: Mike Duffy
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 Borchers @ USDA ERS
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 Borchers @ USDA ERS
Why Care about Farmland Ownership? 3,500.0 Distribution of U.S. Farm Assets 3,000.0 2,500.0 Billion $ 2,000.0 1,500.0 1,000.0 500.0 0.0 2011 2012 2013 2014 2015F Real estate Livestock and poultry Machinery and motor vehicles Crops stored Purchased inputs Financial assets Source: USDA ERS
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.
What States Do TOTAL Cover? Source: USDA ERS
Who own the land and land rented out?
Iowa Landlords by Ownership Arrangements - # Landlords 100.0 90.0 80.0 Operator vs. Non-operator Landlords 2014 Percent of Landlord 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Iowa Midwest US Non-operator landlord Operator landlord Source: USDA NASS TOTAL
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
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: 16.33 million acres more than 50% of Iowa Farmland. Individual, 37.0 Source: USDA NASS TOTAL
US Land in Farms by Ownership 2014 Source: USDA NASS TOTAL
Owner-operated and rented farmland by ownership, by region, 2012 Source: USDA NASS TOTAL USDA ERS
Distribution of Iowa Farmland Acres by Land Ownership Type 1982-2012 100% 90% 80% Percent of Farmland Acres (%) 70% 60% 50% 40% 30% 20% 10% 0% 1982 1992 2002 2007 2012 Sole owner Joint tenancy Tenancy in common Partnership Estates Trusts Corporations LLC Government/institution Source: Ag DM PM1980
Distribution of Iowa Farmland Acres by Tenure 1982-2012 100% 90% 80% Percent of farmland acres (%) 70% 60% 50% 40% 30% 20% 10% 0% 1982 1992 2002 2007 2012 Year Owner-operated Cash rent lease Crop share lease Other type of lease Source: Ag DM PM1980
Distribution of Iowa Leased Farmland by Types of Leases 1982-2012 100% 90% Percentage of Leased Iowa Farmland 80% 70% 60% 50% 40% 30% 20% 10% 0% 1982 1992 2002 2007 2012 Cash rent Crop share Other Source: Ag DM PM1980
Distribution of Iowa Leased Farmland by Types of Leases and Ownership 2012 100% 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
Economics of Land Ownership
Rent, Expense, Asset, Debt by Landlord Ownership Types 2014 Rent Expenses Value of Land Total Debt Received and Buildings Operator Landlords 0.92 0.22 22.12 0.66 Non-operator Landlord 2.81 0.62 78.51 1.84 Individual & Partnership 1.80 0.40 49.82 1.14 Corporation & Trust 0.84 0.18 23.52 0.49 Other 0.11 0.024 3.17 Multiple* 0.07 0.015 2.01 Iowa Total 3.74 0.84 100.63 2.50 Illinois Total 3.8 0.90 107.8 3.48 Midwest Total 14.3 3.7 419.1 15.1 U.S. Total 31.2 9.2 1,132.0 32.8 Source: USDA NASS TOTAL
% Total Rent by Landlord Ownership Arrangements 2014 2.9 1.9 24.6 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
% Total Expense by Landlord Ownership Arrangements 2014 2.9 1.8 Operator Landlords Individual & Partnership Corporation & Trust Other Multiple* 21.4 26.2 Total Expense in Iowa 2014: $0.84 Billion 47.6 Source: USDA NASS TOTAL
% Total Ag Real Estate Value by Landlord Ownership Arrangements 2014 3.2 2.0 22.0 Operator Landlords Individual & Partnership Corporation & Trust Other Multiple* 23.4 Total Value of Land & Buildings in Iowa 2014: $100.63 Billion 49.5 Source: USDA NASS TOTAL
Rent Expense Asset Debt per Landlord in Iowa 2014 Value per Landlord ($) 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 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
Method of Finance 1982-2012 100% 90% 80% Percent of Farmland Acres 70% 60% 50% 40% 30% 20% 10% 0% 1982 1992 2002 2007 2012 Year Free of debt Under contract Mortgaged Source: Ag DM PM1980
# 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
Distribution of Production Value across Commodities (US 2011) Source: USDA ERS ARMS 2011
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
How Did Iowa Landlords Acquire Their Land?
Acquisition of Land by Landlord Types 2014 Operator Landlord (percent) Non-operator Landlord (percent) All Farmland (percent) Purchased from non-relative 50.5 32.5 36.7 Purchased from relative 18.1 14.4 15.2 Purchased at auction 5.8 5.7 5.7 Inherited or received gift 24.7 46.5 41.4 Obtained some other way 0.9 0.9 0.9 Total 100 100 100 Total Acres Rented Out 3,786,869 12,546,625 16,333,494 Source: USDA NASS TOTAL
16,000,000 Acquisition of Land by Landlord Types 2014 14,000,000 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
% Acquisition of Land by Landlord Types 2012 100% 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
Demographics of Iowa Landlords
% of Farmland by Age and Life Stage of Owners 100% 90% 80% 70% Percent of Farmland 60% 50% 40% 30% 20% 10% 0% 1982 1992 2002 2007 2012 Year < 25 25-34 35-44 45-54 55-64 65-74 > 74 Source: Ag DM PM1980
% of # Landlords and # Acres by Age and Life Stage 2012 35% 30% 25% Percent 20% 15% 10% Owners Acres 5% 0% < 25 25-34 35-44 45-54 55-64 65-74 > 74 Early stage Early stage Mid stage Mid stage Mid stage Late stage Late stage Age and Life Stage Source: Ag DM PM1980
% of # Landlords and # Acres by Age and Life Stage 2012 60% 50% Percent of farmland acres 40% 30% 20% 10% 0% 2002 2007 2012 2002 2007 2012 2002 2007 2012 < 35 35 to 64 > 65 Year of financing and age Debt free Contract Mortgage Source: Ag DM PM1980
Putting Aging Farming Population into Perspective Source: Carl Zulauf, Census of Ag.
Putting Aging Farming Population into Perspective Source: Carl Zulauf, Census of Ag., BLS
Distribution of Farmland by Highest Education Level 1982-2012 100% 90% 80% Percentage of Farmland Owned 70% 60% 50% 40% 30% 20% 10% 0% 1982 1992 2002 2007 2012 < High school High school Some post high school BS, BA, etc. Graduate degree Source: Ag DM PM1980
Distribution of Farmland by Gender and Age 2012 35% 30% Percentage of Farmland Acres 25% 20% 15% 10% 5% 0% <35 35-64 >65 Males Females Source: Ag DM PM1980
Distribution of Farmland by Farming Status of Owners 2002-2012 100% 90% Percentage of Iowa Farmland Owned 80% 70% 60% 50% 40% 30% 20% 10% 0% 2002 2007 2012 Full-time farmer Part-time farmer Do not farm Source: Ag DM PM1980
Anticipated Transfer of Iowa Farmland
Anticipated Transfer over the next 5 years (2014-2019) 3000000 2500000 Numbers on top of columns show the percentage of farmland acres in corresponding categories 7.7% 8.7% Farmland Acres 2000000 1500000 1000000 9.7% 10.7% 10.1% 8.6% 500000 0 All Acres Rented Out Acres Rented Out by Non-operator Landlord All Farmland Put or keep in will Total to Transfer
% of Farmland Expected to Transfer in the Next Five Years, by Region, 2015 Source: TOTAL 2014
% 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
Method of Anticipated Transfer 1982-2012 100% 90% 80% Percentage of Farmland 70% 60% 50% 40% 30% 20% 10% 0% 1982 1992 2002 2007 2012 Will to family Will to others Give to family Give to others Sell to family Sell to others Put in trust Other
Beginning Farmers and Farm Transition
Share of Beginning Farms in the US 2011 Beginning Farmers: < 10 years of farming experience 38% in 1982 26% in 2007 Source: USDA ERS ARMS 2012
Age Distribution of US Beginning Farmers vs. Established Farmers 2012 Beginning farmers: < 10 years of farming experience Source: USDA ERS ARMS 2012
Value of Production: Beginning vs. Established Farmers Beginning farmers: < 10 years of farming experience Source: USDA ERS ARMS 2012
Source of Household Income: Beginning vs. Established Farmers Beginning farmers: < 10 years of farming experience Source: USDA ERS ARMS 2012
Thank You! Wendong Zhang Assistant Professor and Extension Economist Iowa State University 515-294-2536 wdzhang@iastate.edu http://www.econ.iastate.edu/people/faculty/zhang-wendong