Leasing land as a tenant means a little more uncertainty for farmers. Making decisions on how to manage the farm ground and setting up agreements to continue farming the land — all while not knowing how a landowner may respond in the future — can be a challenge.
Deb Yates, a Palo, Iowa, farmer, said there have been fewer acres available for lease in the area, impacting her 31-year old son, Matt, who is looking to begin building his own farming operation.
Part of that is due to a solar project being constructed near the eastern Iowa town. Some landowners have been setting up leases to the solar company instead of using it as farm ground.
“We added a cow-calf herd because we can’t get any more land,” Yates said. “It’s just not available. My son has been courting different landowners around here, but on some he’s waiting his turn because the tenants are 65-plus years old and we don’t want to push another farmer out.”
While some farmers may have difficulties, Steve Bruere, president of Peoples Company in Des Moines, said this doesn’t represent all “absentee” owners. Most landowners who do not operate on or live on the ground they own are often former farmers or have lived in a farming household, so they can understand a bit more when working with the operators.
“I own farmland personally and I actually hire farm managers to manage my land,” Bruere said. “It’s a communication thing. We’ve always said that owners who are focused on maximizing cash yields do that at a detriment of long-term sustainability.”
One attitude Bruere has encouraged for landowners is to have more transparency with tenants in both directions. Landowners should ask about yield data and input costs so they have a better idea how to set up rent prices during negotiations.
“We are in a position where we can be smarter about how we manage farms because of technology,” he said. “As you get more transparency, you get more communication and more equitable outcomes for both farmers and landowners.”
More than 80% of the land in Iowa is rented, based on information in the 2017 Iowa State University farmland ownership survey, conducted every five years. In that survey, which will be updated for 2022, nearly 20% of Iowa farmland was owned by trusts, with 19% owned for long-term investment or by family inheritance.
The corporate- or investment- owned land is often the sticking point for complaints.
“In some of these cases, the land is more of an investment property,” said Bari Richter, a representative with Iowa for Responsible Solar. “That’s when you start leasing ground for a certain number of years and it’s not necessarily an emotional connection but more about the investment.”
Richter said one reason landowners may choose to rent to a non-farming entity is due to the opportunity for a higher lease payment for a longer period of time. While it makes financial sense to get the most you can for land, it does have a ripple effect for farmers in those communities.
In one industrial solar project in Coggon, Iowa, Richter said a farmer is losing 540 acres out of his lease portfolio, which will make other rented farm land much more competitive.
“Now he’s got to go find additional acreage, and to do that it means possibly breaking in on other people’s leases,” she said. “Then you have a domino effect going on as he tries to make up for that ground.”
Yates said in her experience some long-distance landowners aren’t as conscientious about the environmental impacts of certain land management practices. That leads to deterioration, weighing on the production potential of the farm ground.
“You can say ‘this needs to be done,’ and all they want to know is the cost,” Yates said. “That’s all they care about.”
However, Bruere said making a broad statement about absentee landowners is not possible. While there are some who may take a less hands-on approach with their land, many are acutely aware of what is going on.
“I can show examples of landowners who treat their land like a classic antique car,” Bruere said, “but there are also folks who are out of touch and aren’t good stewards either. It’s hard to put a broad brush against it. I would say by and large, one of the challenges we’ve seen is a lot of absentee landowners relied on their farm tenant to (do some of that).”