84% of Iowa Farmland Now Owned Debt-Free
According to an Iowa State University study, 58% of Iowa’s farmland is under a lease, which is up 1 million acres since the study was last conducted in 2017.
Researchers’ findings reveal farmland leases continue to be handled on a cash rent basis rather than crop share and owner-operated. Since 2017, cash rent, specifically fixed cash rent, has increased 5% to 87%.
“The rise of cash rent, especially fixed cash rent, correlates with the growing percentage of landowners who are part-time and non-residents of Iowa,” says Wendong Zhang, associate professor at Iowa State. “Fifty-five percent of land is owned by an owner who did not farm in 2022, and, of them, over half do not have farming experience. Especially for those landowners, a fixed cash rental contract is a natural choice.”
Only 47% of farmland was directly operated by a landowner in 2017. Today, that number has been cut to 42%.
Iowa’s Farmland Ownership
There are also changing tides in how Iowa farmland is owned. Roughly 80% of Iowa’s farmland in 1982 was in sole ownership or joint tenancy; now, that number sits at 52%. Instead, landowners are opting for a trust, with numbers growing from 1% to 23% since 1982.
Zhang 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,” Zhang says.
The researchers also found 17% of farmland owners do not have a planned successor. However, the survey finds 75% of Iowa’s landowners 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 Iowa 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 state’s 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 1980s farm crisis, researchers anticipated the large gap.
According to Tong, farmers are holding onto their land more in recent years due to increased commodity profits, aging landowners and government payments granted for the COVID-19 pandemic.
