who buys and rents iowa’s farmland · – attended college in shanghai and hong kong – ph.d. in...
TRANSCRIPT
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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
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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
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Ag Real Estate Investment Trust
Source: Denver Post, DTN,WSJ, AgTax.com
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Farmer’s Interest Still Strong- Sioux County Sale Nov 27, 2015$17,300/acre – 154 Acre, CSR2 = 100
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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
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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
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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
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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
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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%
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What States Do TOTAL Cover?
Source: USDA ERS
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Who own the land and land rented out?
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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
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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
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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
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US Land in Farms by Ownership 2014
Source: USDA NASS TOTAL
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Owner-operated and rented farmland by ownership, by region, 2012
Source: USDA NASS TOTALUSDA ERS
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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
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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
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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
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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
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Economics of Land Ownership
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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
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% 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
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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
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% Total Ag Real Estate Value by Landlord Ownership Arrangements 2014
Total Value of Land & Buildings in Iowa 2014:
$100.63 Billion
Source: USDA NASS TOTAL
22.0
49.5
23.4
3.2 2.0
Operator Landlords
Individual & Partnership
Corporation & Trust
Other
Multiple*
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Rent Expense Asset Debt per Landlord in Iowa 2014
Source: USDA NASS TOTAL
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
All Landlords Operator Landlords Non-operator Landlord Individual & Partnership Corporation & Trust
Valu
e pe
r Lan
dlor
d ($
)
Rent Received Expenses Value of Land and Buildings ($ 1000) Total Debt ($ 10)
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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
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# 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.
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Distribution of Production Value across Commodities (US 2011)
Source: USDA ERS ARMS 2011
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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.
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How Did Iowa Landlords Acquire Their Land?
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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
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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
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% 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
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Demographics of Iowa Landlords
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% 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
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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
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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
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Source: Carl Zulauf,Census of Ag.
Putting Aging Farming Population into Perspective
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Source: Carl Zulauf,Census of Ag., BLS
Putting Aging Farming Population into Perspective
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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
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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
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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
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Anticipated Transfer of Iowa Farmland
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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
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% of Farmland Expected to Transfer in the Next Five Years, by Region, 2015
Source: TOTAL 2014
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% 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
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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
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Beginning Farmers and Farm Transition
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Share of Beginning Farms in the US 2011
Beginning Farmers:< 10 years of farmingexperience
38% in 198226% in 2007
Source: USDA ERS ARMS 2012
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Age Distribution of US Beginning Farmers vs. Established Farmers 2012
Beginning farmers:< 10 years of farming experience
Source: USDA ERS ARMS 2012
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Value of Production: Beginning vs. Established Farmers
Beginning farmers:< 10 years of farming experience
Source: USDA ERS ARMS 2012
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Source of Household Income: Beginning vs. Established Farmers
Beginning farmers:< 10 years of farming experience
Source: USDA ERS ARMS 2012
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Thank You!
Wendong ZhangAssistant Professor and Extension Economist
Iowa State University515-294-2536
[email protected]://www.econ.iastate.edu/people/faculty/zhang-wendong