In a helpful response to an earlier post, my most loyal reader, "Anonymous", offers this link to a paper by Duffy and Holste regarding farmland and rental rates. It was mildly interesting reading until I hit this paragraph:
In spite of the uncertainty, Iowa land ownership and rental arrangements will beThe eye blinks; the mind stumbles...
changing in the near future. Almost half, 48 percent, of Iowa’s land is owned by people
over the age of 65 and almost a quarter, 24 percent, is owned by people over the age of 75.
This means there will be a significant amount of farmland changing hands over the next
few years. It remains to be seen whether or not this land comes on the open market for
sale. Regardless of how or to whom the land is transferred, there will be an impact on land
values. Iowa land values and the returns to Iowa farmland will remain as a topic of keen
interest for many years to come. [More]
The clear (to me, at least) implication of this statement is we are facing an unusual event re: farmland transfer. But are we? If only there were a SVFAP (Strange Visitor From Another Planet) who could place this concept in perspective, albeit whilst wearing orange underwear outside his pants...
[It's a little box with a pay phone in it]
[It's a phone you can pay to use if you don't have a cellph- oh, never mind!]
Frustrate not!! Contextor is here!!
Contextor reads the passage and muses, "Hmmm, '48% of Iowa's farmland is owned by people over the age of 65'. Interesting, but is that number greatly different than yesterday or 2000 or 1957? The authors obviously don't think it is important to google that up for their readers."
Contextor speculates: Perhaps farmland tends to end up owned by old people for the same reasons everything else ends up owned by old people: they've lived long enough to pay for it, and you can bloody well pry it from their cold, dead fingers. Who should own farmland - teenagers? Why is there a tone of alarm with statistics like these?
He reads on, "...almost a quarter is owned by people over the age of 75". The hint here is these geezers will all be losing their grip on this precious asset any minute now as the Grim Reaper gathers them in. But do farmowners exhibit normal longevity? Or are many of them too danged stubborn to die on schedule?
But let's do some simple math. If we assume land is farmland is inherited/transferred once per generation (20-25 years), then about 4-5% of it should roll over every year from mortality reasons alone. Therefore, we can expect - at any time - about 50% of all land to transfer in the next decade or so (10 x 5%) - right?
That statement works every day, all the time. Now it sounds more urgent to talk about how much land is going to rollover in the next X years, but unless you compare it to an average from the past it tells you nothing. The ERS found this same thing a long time ago (1989):
Land transfers are the cutting edge in the structure of landownership and control. Even though the annual turnover in rural land is very slow -- currently 4.6 percent of parcels and 3.5 percent of land -- concerns linger that farmers in the United States are losing control of the resource that is basic to their industry. Small, persistent changes can eventually make a difference, but the data examined here indicate that a transfer of landownership out of agriculture is occurring at an almost imperceptibly slow pace. [More, but ya hafta order it]Myriad questions loom unconsidered by the authors.
- Will longevity trends (especially in previously short-lived males) change this normal rate? [40 points]
- Why should future land turnover be any different than the past? (Discuss in paragraph form) [30 points]
- Do you know of an flat black 80 I can get for under $5K? [200 bonus points]