Land Transfers and how it will affect Farm Growth

land transfers

How will land transfers affect your farm growth?

Have you thought about buying land recently? What does the near future look like for this ambitious but important goal? According to the USDA Economic Research Service, of the 911 million acres in the lower 48 states. Along with that, 31% of the land today is owned by landowners who are not involved in farming, but rent it to a non-relative operator. This leaves 61% which is owned by operators and the remaining 8% is one operator renting to another. Thirty-nine percent of the farm land in use today is rented and of that rented ground, almost 80% of the land is controlled by someone who is not, nor has ever been, a producer.

In 2014, of these non-operator landlords, 54% of the land was acquired either through an inheritance or it was gifted to them. If you contrast the farm operator, it looks much different. During this same time period farm operators acquired 70% of their land through buying it from a relative or non-relative. The farm operator is typically less likely to sell their land than non-operator landlords. Only 2% of the land from 2015-2019 will be sold to a non-relative in what is considered an arm-length transaction where the two parties are not related. This leaves a potential buyer with the reality that the market for buying land is slim. Unless you buy it from a relative or it is gifted to you, it will be difficult to grow through buying land.

You have two options to grow for farm.

So if you are a producer today, you have two options to grow your operation, to buy or to rent. The picture painted of the future of buying ground seems limited. But what about renting, what does this picture look like? Currently there are 355 million acres being rented today, and of those acres 284 million or 80% are owned by someone who is not an operator. They may or may not even be living in the same area where their land is located.

There is opportunity to grow by renting ground, and connecting with the right landowners improves your chances of growth. You, as a grower, are limited to what you can purchase from both a land availability standpoint, as well as from a cash flow standpoint. But what if you connect with landowners who want to invest in land? If you have a great relationship with them and are meeting their goals, you will increase your chances to grow as well.

The other number I want to share with you is 65. What is significant about this number and why should it matter to you? At least 1/3 of all the farmers in 2014 were age 65 and over. As you know, just because a farmer turn 65 years old doesn’t mean they will retire. They most likely are thinking about their exit plan and what that will look like. As a younger producer, you will have some awesome opportunity if you create a plan and then implement your plan to grow.

Farm growth beyond knocking on door

You as the grower are trying to sell yourself, it is all about getting in front of enough landlords to turn their heads and make them think, “Do I have the right person farming my ground?” “Should I be working with someone who is doing different practices or has a better nutrient management plan?” This is hard and knocking on doors isn’t a comfortable option. Can you get in front of enough landlords in this way to pick up ground and grow. Or are you keeping pace with the land you are losing? Probably not and feel good about yourself. When do you have time to prospect with everything else that goes into farming? When it comes to growing your farm, it is all about putting yourself in a position to be pursued. If you are working with Bird Dog, you are doing just that.

 

 

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