A future shift of land ownership has been discussed over the past several years by various forecasters. AgAmerica’s 2023 U.S. Farmland Report projects that transition coming, as well. And that transition would be significant over the next 20 years if those projections hold true.
RELATED: Last week, we explored AgAmerica’s findings concerning the possible dip in farm income in 2023 compared to the previous year. Catch up on that American Farmland Owner story here.
Here are a few figures that stand out from AgAmerica’s annual report related to land ownership transfers:
(estimated value of U.S. farmland)
(estimated value of U.S. farmland held by individuals who are at least 65 years old)
Those figures demonstrate the sizeable percentage of American farmland that older owners hold. AgAmerica predicts that will mean numerous transactions over the next two decades. Succession planning will be key as those older farmland owners prepare for the future.
Farmland doesn’t leave the family often. AgAmerica’s report lays that out.
(Image courtesy: AgAmerica 2023 U.S. Farmland Report)
The report found: “In terms of price discovery, just one percent of farmland trades hands in a sale between non-family members. The majority of that is sold farmer-to-farmer through an off-market transaction that avoids the use of a broker or auction. Farmers and their families set the price of farmland and determine the potential for active or passive farm income to be earned from farmland ownership.”
Most farms – 75%, according to the report -- continue to be farmed by an active operator or a retired one. It remains the exception for someone other than a family member to own the land. Less than three percent of farms are non-family owned, including land that is institutionally owned.
But the concept of “non-operator landlords” also merits more explanation. Two-thirds of this land is still in the hands of a family member. The report states regarding the non-operator landlord land, “54 percent given as a gift or part of an inheritance and 11 percent was obtained through a purchase from a relative. Only one-third of farmland owned by non-operator landlords— which includes institutional investors and corporations—was purchased from a non-relative. This implies that a majority of non-operator farmland acquired is held for reasons related to family ties and not purely investment related.”
The report follows those statistics with a challenge that remains for non-family, non-operator landlords: “It also leads us to believe that a majority of non-operator landlords do not have personal farming experience and face significant challenges without proper guidance. This is why many rely on land management firms to negotiate contracts and oversee operations.
RELATED: Read the full AgAmerica report here.