Moneywise

January 16, 2009

Tectonic land shifts likely

Stopping by to have a simple cup of coffee with the landowner down the road could pay huge dividends in the very near future, says Iowa State University economist Mike Duffy. The 2007 "Farmland Ownership and Tenure in Iowa" report, released in November, shows that the average age of landowners in the state, as well as other demographics, have changed considerably in the five years since the last report was released, and tectonic land shifts could be on the horizon.

"What we have now is 55% of the land owned by people over 65, and one in 10 acres is owned by a single woman over the age of 75," Duffy says. "It is interesting in terms of ownership changing hands and, for young farmers, how they are going to acquire that asset." Conversely, less than 3% of the state's farmland is owned by people under 35 years old, and that percentage is falling.

"I think a lot of farmers are missing the boat by not stopping by and having a cup of coffee with a landowner from time to time," Duffy quips.

Today, land ownership changes will be largely driven by the amount of land going into trusts, he believes. "I saw a sale bill for an auction of 200 acres, and there were four different trusts and an individual listed as the owners!

"Overall, the majority is still going to go into the family either through a will, sale or gift. But about 18% of the land is going to be going into a trust," Duffy says. "It can be a nightmare when you start to consider how land in trusts is going to be handled and split up." —Greg Vincent