If you owned a beach home valued at $1 million, would you rent your property with no stipulations, no written lease, and no demands on how the renters would care for your investment?
That probably wouldn’t make much sense, would it? Yet that’s exactly what’s being done with thousands of acres of farmland owned by absentee landowners. Consider this: if a landowner has 160 acres and that parcel of land is worth $7,500 per acre, the landowner has a property investment valued in excess of $1 million!
Absentee landowners and decision making
Yet, with land that’s valued at well over a million dollars– more than that expensive beach house I mentioned — absentee landlords provide very little oversight. Results from a recent survey show that more than 95% of absentee landowners do not participate in tillage or fertilizer decisions. 65% of absentee landowners rely on their farm operator or someone else to make decisions on permanent conservation practices. And with more than 50% of the farmland being rented, those numbers make me crazy. What the heck!
While it’s the operator who does the farming, I think it’s time for more landowners to engage with operators in deciding how to protect their investment.
Protecting your land investment is very much like maintaining and improving your home. With a home, you may decide to improve the home’s worth by building an addition, remodeling a kitchen or installing a second bathroom. You may need to do regular maintenance like painting, gutter repair and replacing windows. Landowners looking to maintain their land will want to control noxious weeds and ensure optimal levels of nutrients, such as potash and phosphates. Landowners focused on growing the value of their land assets may decide to install permanent practices like drainage systems and conservation structures including terraces, ponds and grassed waterways.
Unfortunately, landowners who live away from their land seem to be doing less and less to build land value with conservation practices. Sixty-five percent (65%) of absentee landowners report they leave decisions about conservation up to someone else. Fifty-three percent (53%) of these absentee landlords reported they spent less than a total of $5,000 on conservation practices over the past 10 years. Another 25% said they spend less than $15,000 in that same time. Can you imagine spending less than $15,000, over a 10 year period, for maintaining a million dollar house? I doubt it.
Where from here
For the past 12 years, I have been working to understand the motivation and values of absentee landowners. Trust me, there are no easy answers. I think it is obvious that if we are going to solve our water quality problems, we need to motivate absentee landowners.
The surveys show that a landlord’s most trusted advisor is their farm operator. The surveys further show that a farmers most trusted advisor is the ag retailers. It seems obvious that the ag retailer is a very important link in the equation. Ag retailers are situated in a position to help the farmers and, at the same time, help the landowners. The question is, what motivation does an ag retailer have to promote conservation?
Work on absentee landowner issues. Read below to learn more about the recently announced Great Lakes Protection Fund project.
New Project Underway to Reduce Sediment, Nutrients in Great Lakes Basin
Working with Non-Operating Landowners & Farmers to Improve Water Quality in the Great Lakes
Excellent analogy! Even 100 acres worth $4000/acre equals a better than an average home at $400,000. Too bad absentee landowners don’t think of their land as they would a rental house.
How do we reach these landowners? A big chunk of these folks are widows. Another group are adult children of deceased farm parents. How do we communicate the values of no-till and cover crops and diverse crop rotation (just 3 examples of good practices). In a round table discussion at the National No-till Conf. in January I learned that several no-till farmers are taking photos of their operation, including videos by drone, and sharing those in a Powerpoint with their landlords. Perhaps the best way to reach the landlords is to help the “good farmers” acquire persuasive educational materials to show prospects.
Randall, your ideas are spot on. From surveys we know absentee landowners care about the environment, but they don’t know what to do. Conservation is complicated. Most of them don’t have the time or capacity to learn about this complexity. We know farming is going to continue to grow in scale. We need to make a serious effort to help conservation farmers be a disproportionate part of that growth. The best way to increase conservation is to increase the number of acres conservation farmers actually farm. We know if a conservation farmer rents another piece of land we don’t need to teach him/her what to do. They already know how to farm with no-till, grassed waterways, field borders, etc. This is something Agren has started to work on. I will write more about that in the next couple of weeks.
This is a great post. We’re working to make more farmland access happen for sustainable/organic farmers happen here in northeast Illinois and we’ve found it’s a complicated, multi-variable equation. But we’re realizing that a big part of the equation is the expectations and vision of the landowners who are leasing their land. If they want conservation practices on their land and their land is in demand, they’re in a good position to make change happen, even if that’s incrementally. And we’re seeing more landowners want to make that change happen but just not know how. Tom, I plan to use this analogy going forward in working with landowners. (I would add, on a personal level, that if the landowner is a person of faith they might be encouraged to think of the home not even being their own but instead, ultimately, God’s whose evaluation of their stewardship has a much wider focus than just how the land has contributed to the landowner’s bank account.)
Nathan, thanks for your comment. I absolutely agree.
More and more I believe that the future to implementation of conservation measures will begin with tax advisers, financial planners and bankers. It may sound strange to some that economics and financial planning should drive this issue but ultimately I really believe it will happen that way, particularly in relationship to the issue of absentee owners. To put it bluntly, if I live in Chicago and own agricultural land in Iowa, as soon as my tax adviser says “make this investment in conservation on your land and it will benefit you in this way (X$)”, at that point I will make a conservation decision even though I may not really care about water quality, soil conservation or flood mitigation.
Dennis, this is a great point. I should probably do a little research. Do you have any ideas of who I could start with when asking questions?