The Dirt Issue – 45 Ag Landlords

Posted on December 9, 2019
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As members of Skagitonians to Preserve Farmland, you have joined with us in protecting farmland, as farmland, far into the future. So, too, have the subject of this issue of The Dirt—Ag Landlords.

Land is the primary input in farming. According to the USDA’s farm-sector balance sheet for 2014, land comprises 81 percent of the total asset value in U.S. farming. Knowing that, would it surprise you to learn that, nationwide, 30 percent of all farmland is owned by non-farming landlords? Also known as non-operating landlords, these are individuals, families, or—ever more frequently—trusts that choose to retain ownership and rent their land out to farmers.

More Prevalent than You Might Guess
Across all U.S. farming, more than half of cropland is rented. Even here in Skagit County, the USDA’s latest data (2012) says that 20 to 29 percent of farmland is rented farmland.

The tendency toward farmers operating on lands that they both own and rent is steadily increasing. In 1964, two-thirds of farmland was farmed directly by the owner. As of 2012, the largest percentage of farm operations is now done as “part-owner,” the current term for farming partly on owned land and partly on rented land.

Why Own Farmland if You’re Not Going to Farm It?
First of all, the land is being farmed, just not by the owner. Over fifty percent of land owned by non-farming landlords was acquired through inheritance or gift. It is often land owned over several generations.

By way of example, the story behind one current 30-acre parcel of leased land in Skagit County begins in 1906, the year it was acquired. In those early days, clearing the land for agricultural production meant years, even in this case decades, of blowing up and burning tree stumps to create the dairy which operated on the land until the end of WW II when the owner was 70. At that time the dairy closed and the land, originally nearly 40 acres, was parceled. The founder’s grandchildren now own the 30-acre portion, in common. Since the 1970s, that parcel has been leased to one farming family, matching their generations to the landlord’s generations. The current owners, knowing how much of their family’s history is imbedded in the land, want it to remain in agricultural production.

Similarly, Wendal Tobiason’s grandfather, Fred Ortgies, acquired his land in the 1930s. In time it passed on to his daughter and, in turn, onto her five children who hold the land in common. Four parcels, totaling 100 acres, have been leased to a local farming family over generations. As Wendal said, “We believe in the same thing as SPF does.” He and the rest of the owners want the land to be protected as a unique resource. With good farmland being as limited as it is, it’s important that it be kept as it is.

The Impact in Skagit County
Crop rotation is a major tenet in Skagit County agriculture. With as many as ninety different crops grown in the County, the necessity to keep crops rotating from field to field is essential to promote soil health, deter pest or pathogen infestations, and maintain the isolation required to grow seeds free from infiltration from other strains. As agricultural trends and marketing demands shift over time, having farmland available to rent is absolutely necessary to respond to those changes. Determining the best possible match of farmland to crop to growing season and rotation is a logistical challenge that can often be met by not being tied to one location. Skagit County farmers know their own land; they also know the characteristics of land available to rent and they know it over a time scale that can cover many years.

A Huge Impact for Beginning Farmers
The biggest barrier to new farmers is in acquiring land. By initially renting farmland, however, new farmers are able to gain experience while directing their capitol to purchasing machinery, establishing marketing and distribution channels, and making infrastructure improvements to their farming operations. This opportunity gives new farmers the chance to prove their business acumen while limiting the capitol requirements of starting their new venture. Without farmland to rent, the farmers needed in the future would be turned away.

Determining the Land’s Rental Value
You’d be right if you assumed there is a considerable outlay in time and effort in negotiating and managing rental contracts. Farmers’ criteria for suitable land vary considerably as does the lease rate. Some of the determining factors include how well the land drains, the overall size of the acreage, proximity to the farmer’s base of operation and the ease of access. Ag landlords pay the property tax and drainage fees which cover maintenance of drains, etc. The farmer is responsible for maintaining the soil and, sometimes, pays for the power to the well/pump. In long-term lease arrangements, the landlord and the farmer coordinate strategies to not just maintain, but improve soil health.

A Win/Win for Skagit Agriculture
So, next time you’re driving through Skagit County farmland and encounter a slow-moving farm implement, remember you’re seeing proof that Skagit agriculture is moving in the right direction: ag landlords and Skagit farmers working together for the good.