What do you see when driving across Illinois and the Midwest during the summertime? Corn, right? And probably some soybeans as well. Indeed, the Midwest and Illinois are blessed with some of the most productive soils in the world. They were deposited here with help from ice age glaciers. Early settlers farmed the fertile prairie so that they could feed their families and the expanding United States. Today, those acres of corn and soybeans help to feed, fuel and clothe not only the U.S., but also the growing global population.
So, do farmers own all of that farmland? Well, let’s think about this for a second. Less than two percent of the U.S. population are actually farmers. Could less than two percent of our population own all of those acres of corn and soybeans? Well, the answer is no. According to the 2007 ag census, the national average of farmland owned by someone other than the farmer is 38 percent. Illinois leads the nation at 62 percent.
The term for this is absentee landowner. This is basically a person(s) or entity who owns the land but does not live on it or work the land themselves. Any person or entity may own land in the United States. Most landowners are individuals, but entities such as churches, schools, universities and corporations can own farmland as well.
Why is so much Illinois farmland owned by absentee landowners? Well, that can be attributed to those productive soils that were mentioned earlier, and strong family ties to ancestral farmland.
Past academic research has shown that farmland is a low systematic risk that behaves like a fixed-income financial asset. Farmland also produces high or adequate returns given the risk, and it can be used in efforts to hedge inflation. The USDA reports that Illinois farmland values had a 5.9-percent continuously compounded rate of appreciation from 1970 to 2009. Illinois’ productive soils; temperate climate; and developed transportation infrastructure of road, railroads and water create a strong demand for Illinois farmland. We also need to remember that the farmland we have is it. There isn’t any more being made.
Many people in Illinois and the U.S. have family ties to farmland in Illinois. Grandma and Grandpa’s or Mom and Dad’s farm has been passed on to younger generations who no longer work on the farm but want to keep it. Holding on to the family farm is not only a valuable asset, but it also allows one to cherish the memories of previous generations.
For whatever the reason an absentee landowner owns a farm, if they are removed from it, help is needed in managing the responsibilities. Farmland improperly managed can quickly decrease or lose short-term financial gains and long-term value. A wealth of knowledge is needed to maintain the productivity, and a farm manager is often needed to provide this assistance. Farm managers are professionals who have working experience with agriculture, farming, markets, new technology, government programs and people. The responsibility of a farm manager is to effectively utilize this knowledge, along with ethics and integrity, to achieve the landowners’ goals both financially and for their farms.
New opportunities in farmland are growing. In Illinois, farms growing corn and soybeans are being diversified to harvest wind power for electrical generation and the production of biofuels with current and future crops. Diversified production on farmland and increased government control through programs emphasize the needed experience of a professional farm manager for an absentee landowner. The diversity of Illinois farmland ownership will continue to grow as a younger, off-the-farm generation inherits family farms, while investments from both farm operators and absentee landowners seek to harvest the reward from rich Illinois soils. iBi