Who Buys and Rents Iowa’s Farmland

Dr. Wendong ZhangAssistant Professor of Economics and

Extension Economist2015 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 Percentage of farmland

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1989 1992 1995 1998 2001 2004 2007 2010 2013

Farmers Investors New Farmers Other

Source: Mike Duffy

TOTAL 2014Tenure, 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 ALLagricultural landowners – operators and non-operators

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?

Source: USDA ERS

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

2011 2012 2013 2014 2015F

Billi

on $

Distribution of U.S. Farm Assets

Real estate Livestock and poultry Machinery and motor vehicles

Crops stored Purchased inputs Financial assets

Landlords’ profiles not fully/directly covered

Source: USDA NASS 2012 Census of Ag.

Percent of Farmland Leased or Rented 2012

U.S. average: 38.8%

What States Do TOTAL Cover?

Source: USDA ERS

Who own the land and land rented out?

Iowa Landlords by Ownership Arrangements - # Landlords

Source: USDA NASS TOTAL

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Iowa Midwest US

Perc

ent o

f Lan

dlor

d

Operator vs. Non-operator Landlords 2014

Non-operator landlord Operator landlord

Iowa Landlords by Ownership Arrangements - # Landlords

19.40%

46.50%

16.20%

12.90%

4.10% 1.80%

Operator Landlords

Individual

Partnership

Trust

Corporation

Other

Source: USDA NASS TOTAL

Operator Landlord, 23.2

Individual, 37.0

Partnership, 14.4

Trust, 23.9

Corporation, 5.3Other, 3.1

Iowa Landlords by Ownership Arrangements - # Rented Acres

Total acres rented out in Iowa, 2014: 16.33 million acres – more than 50% of Iowa Farmland.

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 TOTALUSDA ERS

Distribution of Iowa Farmland Acres by Land Ownership Type 1982-2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1992 2002 2007 2012

Perc

ent o

f Far

mla

nd A

cres

(%)

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

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1992 2002 2007 2012

Perc

ent o

f far

mla

nd a

cres

(%)

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

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1992 2002 2007 2012

Perc

enta

ge o

f Lea

sed

Iow

a Fa

rmla

nd

Cash rent Crop share Other

Source: Ag DM PM1980

Distribution of Iowa Leased Farmland by Types of Leases and Ownership 2012

Source: Ag DM PM1980

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cash Rent Crop Share All Rented

Perc

enta

ge o

f Lea

sed

Farm

land

Sole owner Joint tenancy Tenancy in common Partnership

Life estate Unsettled estate Trust Corporation

LLC LLP Limited partnership

Economics of Land Ownership

Rent, Expense, Asset, Debt by Landlord Ownership Types 2014

Source: USDA NASS TOTAL

Rent Received

Expenses Value of Land and Buildings

Total Debt

Operator Landlords 0.92 0.22 22.12 0.66

Non-operator Landlord 2.81 0.62 78.51 1.84Individual & Partnership 1.80 0.40 49.82 1.14Corporation & Trust 0.84 0.18 23.52 0.49Other 0.11 0.024 3.17Multiple* 0.07 0.015 2.01

Iowa Total 3.74 0.84 100.63 2.50

Illinois Total 3.8 0.90 107.8 3.48Midwest Total 14.3 3.7 419.1 15.1U.S. Total 31.2 9.2 1,132.0 32.8

% Total Rent by Landlord Ownership Arrangements 2014

24.6

48.1

22.5

2.9 1.9

Operator Landlords

Individual & Partnership

Corporation & Trust

Other

Multiple*

Total Rent Received in Iowa 2014: $3.7 Billion

Source: USDA NASS TOTAL

26.2

47.6

21.4

2.9 1.8

Operator Landlords

Individual & Partnership

Corporation & Trust

Other

Multiple*

% Total Expense by Landlord Ownership Arrangements 2014

Total Expense in Iowa 2014: $0.84 Billion

Source: USDA NASS TOTAL

% Total Ag Real Estate Value by Landlord Ownership Arrangements 2014

Total Value of Land & Buildings in Iowa 2014:

$100.63 Billion

Source: USDA NASS TOTAL

22.0

49.5

23.4

3.2 2.0

Operator Landlords

Individual & Partnership

Corporation & Trust

Other

Multiple*

Rent Expense Asset Debt per Landlord in Iowa 2014

Source: USDA NASS TOTAL

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

All Landlords Operator Landlords Non-operator Landlord Individual & Partnership Corporation & Trust

Valu

e pe

r Lan

dlor

d ($

)

Rent Received Expenses Value of Land and Buildings ($ 1000) Total Debt ($ 10)

Method of Finance 1982-2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1992 2002 2007 2012

Perc

ent o

f Far

mla

nd A

cres

YearFree of debt Under contract Mortgaged

Source: Ag DM PM1980

# Farms, Acres, Prod Value by Farm Type 2011 in the U.S.

Source: USDA ERS ARMS 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 GCFIVery Large Farm = $5,000,000 or more GCFI Non-Family Farms = Any farm not operated by owner.

Distribution of Production Value across Commodities (US 2011)

Source: USDA ERS ARMS 2011

Farms by Operating Profit Margin and Farm Type 2011

Source: USDA ERS ARMS 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 GCFIVery Large Farm = $5,000,000 or more GCFI Non-Family Farms = Any farm not operated by owner.

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 36.7Purchased from relative 18.1 14.4 15.2Purchased at auction 5.8 5.7 5.7Inherited or received gift 24.7 46.5 41.4Obtained 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

Acquisition of Land by Landlord Types 2014

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

Purchased from non-relative

Purchased from relative Purchased at auction Inherited or receivedgift

Obtained some otherway

Num

ber o

f Acr

es

Method of Acquisition

Operator landlord Non-operator landlord All farmland

Source: USDA NASS TOTAL

% Acquisition of Land by Landlord Types 2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Operator landlord Non-operator landlord All farmland

Perc

ent o

f Acq

uisi

tion

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

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1992 2002 2007 2012

Perc

ent o

f Far

mla

nd

Year

< 25 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 > 74

Source: Ag DM PM1980

0%

5%

10%

15%

20%

25%

30%

35%

< 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

Perc

ent

Age and Life Stage

Owners Acres

% of # Landlords and # Acres by Age and Life Stage 2012

Source: Ag DM PM1980

0%

10%

20%

30%

40%

50%

60%

2002 2007 2012 2002 2007 2012 2002 2007 2012

< 35 35 to 64 > 65

Perc

ent o

f far

mla

nd a

cres

Year of financing and age

Debt free Contract Mortgage

% of # Landlords and # Acres by Age and Life Stage 2012

Source: Ag DM PM1980

Source: Carl Zulauf,Census of Ag.

Putting Aging Farming Population into Perspective

Source: Carl Zulauf,Census of Ag., BLS

Putting Aging Farming Population into Perspective

Distribution of Farmland by Highest Education Level 1982-2012

Source: Ag DM PM1980

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1992 2002 2007 2012

Perc

enta

ge o

f Far

mla

nd O

wne

d

< High school High school Some post high school BS, BA, etc. Graduate degree

Distribution of Farmland by Gender and Age 2012

Source: Ag DM PM1980

0%

5%

10%

15%

20%

25%

30%

35%

<35 35-64 >65

Perc

enta

ge o

f Far

mla

nd A

cres

Males Females

Distribution of Farmland by Farming Status of Owners 2002-2012

Source: Ag DM PM1980

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2007 2012

Perc

enta

ge o

f Iow

a Fa

rmla

nd O

wne

d

Full-time farmer Part-time farmer Do not farm

Anticipated Transfer of Iowa Farmland

0

500000

1000000

1500000

2000000

2500000

3000000

All Acres Rented Out Acres Rented Out by Non-operatorLandlord

All Farmland

Farm

land

Acr

es

Put or keep in will Total to Transfer

Anticipated Transfer over the next 5 years (2014-2019)

9.7%10.7%

10.1%8.6%

8.7%7.7%

Numbers on top of columns show the percentage of farmland acres in corresponding categories

% 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

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All Acres Rented Out Acres Rented Out by Non-operatorLandlord

All Farmland

Perc

enta

ge o

f All

Acre

s to

Tran

fer i

n 5

Year

s

Put or keep in a trust Sell to a non-relative Gift Sell to a relative

Method of Anticipated Transfer 1982-2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1982 1992 2002 2007 2012

Perc

enta

ge o

f Far

mla

nd

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 farmingexperience

38% in 198226% 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 ZhangAssistant Professor and Extension Economist

Iowa State University515-294-2536

wdzhang@iastate.eduhttp://www.econ.iastate.edu/people/faculty/zhang-wendong