There are changing tides in how Iowa farmland is owned. According to a recent survey by Iowa State University researchers, roughly 80% of Iowa’s farmland in 1982 was in sole ownership or joint tenancy; now, that number sits at 52%. Landowners are opting for a trust, with numbers growing from 1% to 23% since 1982.
Wendong Zhang, Associate Professor at Iowa State, says trusts have recently grown in popularity due to the numerous benefits they can provide:
- Help to keep the farm in the family
- Aid in managing land transitions
- Tax break potential
Trusts are an especially valuable tool in succession planning, according to Zhang.
The researchers also found 17% of Iowa’s farmland owners do not have a planned successor. However, the survey finds 75% of the farmland owners are interested in selling their land to beginning farmers, thanks to incentives in federal and state tax credits.
“At the same time, over half of these landowners expressed concerns about difficulty finding quality beginning farmers, as well as beginning farmers’ ability to pay the best prices for land,” says Jingyi Tong, an Iowa State PhD student involved in the research.
A rise in beginning farmers would tip the scales in another area of Iowa State’s research. Currently, 66% of Iowa’s farmland is owned by people over 65-years-old, which is up from 29% in 1982.
Similarly, women own 46% of the land, and they hold a larger share among senior owners.
Farmland Debt
The study also finds farmland debt is continuing a downward trajectory, with 84% of Iowa farmland owned debt-free — the highest level ever recorded. In 1982, only 62% of land was owned debt-free; however, due to the 1980’s farm crisis, researchers anticipated the large gap.
According to Tong, farmers are holding on to their land more in recent years due to increased commodity profits, aging landowners and government payments granted for the COVID-19 pandemic.
EDITOR’S TAKE:
Here is even more proof that farmers and ranchers are your best customer prospects. They have a tremendous amount of equity with a very low debt-to-equity-ratio in most cases. Farmers learned a very valuable lesson during the so-called “Ag Crisis” of the 1980’s – pay down debt and hold on to your land! That is exactly what the research from Iowa State University demonstrates. Hmmm…..debt-free farmers and ranchers are perfect prospects for purchasing or leasing qualified trucks. This is precisely why you are strongly encouraged to put your truck inventory on AgTruckTrader.com, a website specifically aimed at reaching this target audience. If you haven’t done so already, make sure your inventory is current on AgTT, which is free to all CAD members!
