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Midwest Ag-Land Ownership vs. Rental

Midwest Ag-Land Ownership vs. Rental

The ownership of agricultural land has been in a state of flux in the past century. Land accounts for 81% of total asset value on the 2014 farm balance sheet. Understanding this asset assists in shaping decisions made about succession planning, production, and conservation practices. In addition, agricultural landowners and other stakeholders can use information to inform tenure, land ownership, and land transfer decisions.


Represented in Figure 1 is the percent of landowners that also operate the land that they own. Wisconsin has the largest owner/operator percentage in the Midwest, Illinois at 40%, the lowest.  In Iowa, 46% of agricultural land is operated by the owner.  The Midwest average is 53%.

 

Land owned by an operator, but leased to another operator is shown in Figure 2. Iowa has the largest percentage of this type of land ownership/lease agreement at 12%. The Midwest average is 9%.  This method of land leasing is much less common compared to owner/operator or a non-operator/owner leasing. States with the smallest incidence of this land ownership method are Michigan, Ohio, and Wisconsin with 7%.

   


Figure 3 shows land ownership agreements in which a non-operator of agricultural land leases the land to an operator. The Midwest average is 37%.  Illinois with 50% of its farmland leased from non-operator owners has the highest percentage in the Midwest; Wisconsin with 25%, the least.  Iowa has 41% of its land rented from non-operator owners.

 

 Not included in Figure 3 is comparison of the Midwest to the rest of the U.S. regions. However, in the USDA-Economic Research Service study on land ownership, the Midwest has the largest proportion of land owned by non-operating landlords. The Midwest also has the largest proportion of rented land-to-owned land of any region in the United States.  37% of Midwest ag-land is non-operator owned, the lowest region being the west at 24%. Midwest states will often have higher share of rented land for several reasons. Cropland is more likely to be rented because of the benefit to farmers to spread fixed machinery costs across a larger base land area. Renting land allows this to be done, and economies of scale to be achieved, without adding the additional debt that comes from land purchase. (see this trend in Figure 3.1) For these reasons, the share of rented land in the Midwest is elevated due to the high concentration of cropland in these states. Iowa has the highest quantity of rented land. This, however, is expected because Iowa also has the highest number of crop acres in the Midwest.


Finally, for supplementary information, total owned acreage is represented in Figure 4. There is a total of 164.755 million acres of farmland in the Midwest.  Iowa has the largest amount of ag land at 30.5 million acres and Michigan has the least amount of farmland acres at 9.9 million acres.


Preston Lyman: Research Analyst with Decision Innovation Solutions (DIS). DIS is an Iowa-Based economic research firm which provides regular farm economics research and analysis to the Iowa Farm Bureau staff and members



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