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Rental trends draw interest

There’s high interest in who owns farmland in Iowa, and in particular, the topic of absentee ownership and its impact on rural areas. That’s one reason Iowa State University Extension sociologist J. Gordon Arbuckle decided to study what’s going on with rented land.

The percentage of Iowa farmland that’s rented has remained relatively stable in recent decades. Both USDA statistics and ISU Extension estimates indicate since 1987 the percentage of rented farmland has fluctuated between 50% and 55%. The distribution of rented land is uneven, however. Counties with the highest proportions of rented land tend to be in the north-central and northwest parts of the state, which have some of Iowa’s most fertile soil. Rented land constitutes 50% to 70% of all farmland in counties generally north of Des Moines and west of Waterloo. Conversely, in many of Iowa’s southern counties, where land is less suited for row crops, less than one-third of the land is rented.

Key Points

• New study looks at farmland rental trends in Iowa and implications for the future.

• It’s important to consider how rented land is distributed from a social standpoint.

• One of the most critical issues relates to access to land for beginning farmers.

While the overall percentage of rented land in Iowa has remained relatively stable, growth and decline in that percentage has not been uniform across the state. Since 1987, numerous counties, mostly in the southern half of Iowa, have had a decline in percentage of rented farmland. On the other hand, about half of Iowa’s counties, mostly in the more fertile regions of the state, have seen an increase in rented farmland over the past two decades.

Affects beginning farmers

Many of the counties that have had an increase in percentage of rented land are also the counties with the highest rates of non-operator farmland ownership.

It is important to consider how rented land is distributed from a social standpoint, says Arbuckle. Younger farmers tend to be more reliant on rented land than older farmers. Principal occupation farmers under the age of 44 rent more than 70% of the land they farm.

Overall, only 11% of farmers in Iowa depend exclusively on rented land, 31% rent some portion of the land they farm, and 58% are full owners. Part owners farm nearly twice as much (675 acres) as full tenants (345 acres) and nearly five times as much as full owners (142 acres). Farms USDA defines as very large family farms (those marketing $500,000 or more of ag products annually) rent 67% of the land they farm.

Former farmers and retired farmers are the most common landlords. They make up 41% of landlords. Next are heirs of a farm estate (36%) and spouses of former farmers (13%). Investors with no family ties to the land make up 9%.

Landlords who are former farmers tend to live in the county where their land is located, while heirs of farm estates tend to live out of state or elsewhere in Iowa. That has implications for the future. “As the current generation of former farmers and spouses of former farmers pass their farmland onto their heirs and we pass through successive intergenerational transfers of farmland, the geographic and cultural distance between landlords and their land will likely increase significantly,” says Arbuckle.

He adds, “Landlord involvement with farming and conservation decisions, commitment to relationships with tenants, and perceived land stewardship ethics all appear to decline with geographic and cultural distance. As that distance grows over time, any negative impacts associated with that distancing also will likely intensify.”

Read Arbuckle’s report, “Rented Land in Iowa: Social and Environmental Dimensions,” at Look for ISU Extension publication PMR 1006.

Source: ISU Extension

This article published in the April, 2010 edition of WALLACES FARMER.

All rights reserved. Copyright Farm Progress Cos. 2010.