Who Owns U.S. Farmland?
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One of the most frequent questions we get is "Don’t farmers own all of the land they farm?" The short answer is no, but farmers are often looking to grow their business by farming more acres. They already own the tractors, have employees, etc., so many of them end up renting land they don’t own to farm. In fact, per USDA research, almost 40% of all farmland is rented out.
Farmland Ownership in 3 Charts
Chart 1: Only 61% of U.S. Farmland is Owner-Operated
The chart above shows 61% of crop land is owner-operated (typically not rented or leased). However, much of that land is only partially owned by the farmer. Often cousins, siblings, and even neighbors will own land together. In reality, situations in which a farmer owns cropland outright make up a much smaller percentage of land.
This is one of the many ways AcreTrader helps farmers and landowners. Individuals selling a minority share of a property join with buyers wanting to be aligned with long term owners. Often, land is partially owned by the farmer operating the land and a few relatives, and we can provide an attractive solution for all parties involved.
Breaking down Chart 1, Chart 2 below shows that the majority of non-operator landlords are actually individuals owning whole parcels.
Chart 2: Most Non-Operator Owners are Individuals or Partnerships
While 21% of farmland is owned by individuals and partnerships, an even smaller amount is owned by corporations, trusts, or others. However, companies and trusts are often set up for those who inherit land and no longer live near a farm. Thus, for argument's sake we could say less than 5% of US farm land is owned by professional or semi-professional investors.
In what other asset class is less than 5% of a several-trillion-dollar market owned by professional investors? And, why don’t more investors own farmland?
We believe high barriers to entry keep most people out of this asset class. For most, buying an individual farm is too expensive, the asset is illiquid on its own, and good deals are hard to identify without experience and research.
Chart 3: Buying Farmland Directly is Very Difficult
Despite the historical difficulty of investing directly in land, it is an attractive asset class that has appreciated greatly over time and often protects capital during times of economic turmoil.
This is where AcreTrader comes into play. We allow investors to own farmland without the traditional barriers to entry. It is simple: buy shares of land on AcreTrader and receive annual rent from the farmer while the underlying land increases in value over the long-term.
The above content is not intended to be a comparison between products, but is intended for general, educational and informational purposes only. Any performance noted is historical and there is no guarantee any trends will continue. All investing involves risks, including the complete loss of principal. Diversification does not guarantee a profit or protect against loss in a declining market. It is important for each investor to review their investment objectives, risk tolerance, tax liability and liquidity needs before investing. Investment vehicles have differences in fee structure, risk factors and objectives. Investments are considered speculative, involve a high degree of risk and therefore are not suitable for all investors. Data in the charts above is sourced from the USDA Economic Research Service and National Agricultural Statistics Service, 2014 Tenure, Ownership, and Transition of Agricultural Land (TOTAL) survey. Data excludes Alaska and Hawaii. Additional calculations and analysis performed by AcreTrader.
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