By Jamie Martin
Agricultural land is a critical resource, with 39% of farmland rented in 2022. The choice between owning and renting impacts production, finances, and federal benefits, making it vital for farmers to evaluate their options carefully.
Land Tenure and Trends
The USDA identifies three types of land tenure: full owners, part owners, and tenants. Part owners, who manage both owned and rented land, operate over 50% of agricultural land.
These farms tend to be larger, averaging 1,155 acres compared to 230 acres for full owners. From 2017 to 2022, part owner farms grew by 13%, highlighting the trend toward consolidation.
Row crops like cotton and tobacco are often grown on rented land, making up over 50% of rented acreage. Conversely, high-investment crops, such as orchards and aquaculture, are predominantly owned due to long-term returns.
Factors Influencing Land Ownership
Regional and crop differences drive ownership patterns. In states like Arizona, 92% of farmland is owner-operated, influenced by irrigation and specialty crops. In contrast, rented land dominates the Midwest due to its suitability for row crops.
Land prices continue to rise, creating barriers for young farmers. Most new farmers rely on renting before transitioning to ownership, often through family succession plans. Without such plans, high land values and rents hinder the ability to start or sustain farming operations.
Challenges and Considerations
For renters, high cash rents increase operational costs and debt, especially when returns decline. Owners, however, benefit from rising land values, which can support financing. Yet, USDA program eligibility can complicate matters for both parties, especially with crop-share agreements.
Farmers must carefully assess their resources, production needs, and market trends to make informed decisions about land tenure. Balancing ownership and renting could be the key to sustainable farming.
Photo Credit: usda
Categories: National