Page 8 - Farm and Food Policy Strategies for 2040 Series

Also, farmers and landowners told ERS for its 2014 survey that they expect 62% of their farm
and ranch lands will change hands through trusts, wills or gifts to family or others.

Results of the ISU tenure survey, taken as the tax changes were being completed, also suggest
more farmland ownership is being parked in property holding the types of entities noted above.
In the surveys of 2002 to 2017, farmland reported in individual and joint tenancy (or tenancy in
common) shrank from 77% to 58%, respectively, while land reported in trusts, estates,
corporations and companies swelled from 20% to 39% of Iowa farmland.

However, that swing toward life-long ownership creates an economic barrier for young and
beginning farmers trying to buy land, Cosgrove explains, because any landowner selling to them
faces steep capital gains taxes. “So, people are just holding onto the land and renting it to the
farm operators,” he says.

As a partial remedy, AFT and others are shopping a proposal among members of Congress
and conservation advocates that would allow a one-time capital gains tax exclusion of up to
$500,000 per person if selling land to a beginning farmer.

Some, however, think the impact of the tax changes may be exaggerated.

Says the ASFMRA’s Fevold: “I don’t think tax policy is as big a factor as what some might think
it is. There are a lot of factors why people own land. I think a majority of landowners have more
. . . things they’re worried about than tax policy. If they’re going to own land, they’re going to
own land.”

Sure, family continuity is important for some landowners, says Fevold, who’s been a
professional farm manager with Hertz Farm Management in Nevada, Iowa, since 1982. But, he
says, “there are probably just as many families that want to sell the land and take the money and
run.” Plus, he points out, “a little over half of the land in Iowa is owned by non-farmers.”

Indeed, non-operators’ share of U.S. farmland is substantial, and it is expanding beyond
what has traditionally been held by retired farmers and those inheriting from them.

In the ISU survey, non-farmers’ share of all farmland is suggested in the tally of non-
residents among Iowa farmland owners, which swelled gradually from 6% in 1982 to 20%
in 2017.

Further, non-farmers’ share of rented land is much greater: In the ISU survey, 86 % of leased
acres belong to landowners who do not farm, and only 6 % to someone who farms full time.

Nationwide, non-operators (including retired farmers) own 31% of U.S. farmland, a sizeable
portion, according to the ERS 2014 report, but they own 80% of rented farmland. (Note, though,
that retired farmers make up nearly half of the non-operator landlords, and their non-farming
heirs are surely well represented in that category as well.)

Who are farmland buyers? By tradition, primarily farmers. They’ve long bought most of the
tiny (under 1%) share of farmland that can be expected to show up annually in the open market
and will pretty much keep doing so.

6 www.Agri-Pulse.com