Forget China. The greatest threat to American freedom and global power is robber baron billionaires. We live in a full-on kleptocracy. It's about time we add some new amendments to the constitution to relevel the balance of powers.
Right. Most of it is owned by the llc the farmer set up for thier land, and/or the family trust set up to prevent the land from being split into ever smaller parcels by inheritance.
If you look at history, this is an ancient pattern.
In Judaeo-Christian scriptures, the prohibitions against anyone acquiring ownership of land go all the way back to the Torah.
Though like pretty much every religious prohibition on behaviors which the well-to-do want to do - those commandments fall under the "we never talk about that part" rule.
Most farms are not owned by farmers, most housing is not owned by tenants, most airplanes are not owned by airlines, etc., etc..
Vertical integration can have benefits, but it isn't necessary and has drawbacks. Even when vertically integrated, regulations are often written under the assumption that everything is leased, not owned, so compliance is easier if you own a company that owns an asset, instead of owning that asset directly.
For example, if two people carpool in a car that one of them owns, instead of hiring a taxi, they'll usually split the costs of the fuel and the wear on the car. On the other hand, if they were flying in a small airplane owned by one of them, it's illegal to split the costs of wear on the airplane, unless its a rental or air taxi. Because of this, and other similar effects of FAA regulations, many small airplane owners own a company that owns the airplane, instead of owning it outright, and rent the airplane from themselves, whenever they use it.
If structured the right way, agricultural land has numerous tax benefits that can range based on jurisdiction from carve-outs on inheritance taxes all the way down to property tax exemptions on what could not even be considered a hobby farm (very large exurban lots)
> Eight states in the Corn Belt — Iowa, Indiana, Nebraska, Minnesota, Missouri, Kansas, South Dakota and Wisconsin — restrict the size, structure and purpose of corporations that can own farmland to limit ownership by large investment funds.
> More than 22% of the farmland in 12 Illinois counties with the highest rents is owned by a business entity, defined as an operation with an LLC, Inc, LTD, Co., Corp, LP or LLP tag. Sangamon and Edgar counties were included in this analysis because historical data was not needed.
The TL;DR is that Illinois is one of the few states where there aren't restrictions on farmland owners, and even there it's a small (if growing) problem.
I think this is one of those problems that should theoretically be self-limiting. The economics of a farming family owning their land is too strong - just from the amount of tax breaks and subsidies available. Put another way, the land in a farmer's hands is worth more than in a corporation's.
I think the real risk comes from large farm landholders who want to cash out of their farm but don't have an heir or successor lined up. Farmers are getting old and their kids more often than not don't want to run the family farm anymore and there simply aren't going to be any other buyers.
Farming is somehow still regarded as being some mom-and-pop heartland thing rather than the highly optimized manufacturing operation it has been for decades. Direct farm employment is now just 1.2% of the population. It was 40% in 1900. The special treatments farms and farmers get is an outdated relic kept alive by the electoral college.
The headline is provocative, as some amount of corporate-owned farmland is owned by corporations that are in turn owned by farmers and their families.
I would also push back on the notion that owner-operators are in a better position. It's more accurate to say that farmers who have assets of any kind are better off than those who don't have assets. As an example, generations back in my family we owned a lot of farmland. There were some bad investments made in the farming operation and we almost lost it all. This was in the early 1980s for those who are familiar.
If my grandfather had sold all of his land and equipment in the late 1970s and invested it in the recently-started Vanguard group, rather than re-investing in the farming operation, then my family would be wealthy. Now expecting a farmer to know about index investing and to bet on it when it was just starting is unreasonable. But it's a good lesson in diversification.
When people lionize farming owner-operators, they discount the risk that owner is taking by having so many assets concentrated in one operation. Now farmers do know about investing and diversification, and some do make the rational decision to cash out. Many also don't, for various reasons.
But it's not totally fair to expect farmers to behave differently than other asset owners because farming is seen romantically or in terms of national security.
This is a different argument than one which would decry the position of tenant farmers. Obviously being a tenant farmer owning nothing but equipment is harder than being a farmer who has $5 million invested somewhere else and rents the land he farms.
This is such a contrast to upstate NY where farmland is still overwhelmingly owned by individuals and families. It was nearly 75% the last time I checked. And 70% is owner-operator (the owner is also the farmer). Only a very tiny percentage of active farmland is owned by an investment company.
I own the farm and farm it in Illinois. I owe the land through an LLC, because farming is dangerous and I don't want to go bankrupt if somebody sues me. Farms are expensive and hard to subdivide, so people will put them into a legal entity and pass down to the next generation via a trust. All of my neighbors are doing the same, so we're all counted as "not farmers" here
Farming is a terrible business. My few hundred acres (maybe worth $5M) will only churn out a few hundred grand in profit -- not even better than holding t-bills. The margins get better as you get bigger but still not great.
Many of the buyers keep growing their farms because it's a status symbol. Everybody in your area will instantly know you're a big wig if you're one of the X family who has 2,000 acres all without the ick that comes with running other businesses. You can't buy that kind of status in my community with anything other than land.
This is probably similar in UK - although this is pure speculation.
A limited company owning the "land" which is then leased to the "farm" business that works it.
Possibly a "group" parent company is owned by the actual farmer.
I'm sure there will be good tax and legal protection reasons to structure farms in this way, not forgetting various government schemes which bring in revenue via grants and tax breaks.
I don’t know how to say this without seeming rude, but a few hundred acres is very small. 500 acres is less than a square mile. Is there something about your community that makes farms of that size more common than normal?
Edit: my (extended) family has a farm, and they cultivate X0,000 acres every year, though they own far less. They do plant a larger area than most for their community, but they’re not planting 20x their neighbors.
there is no type of farming that will beat t bills? none? people arent working on ideas to make farming more profitable? i just dont believe that american farms, which cover unimaginably vast areas and are unimaginably numerous, could be continuously funded by banks if they were losing money. thats impossible. subsidies cant explain it. i think youre lying or leaving out some context
This is a critical insight - the statistics likely count many actual farmer-owners as "non-farmers" due to LLC/trust structures, which significantly distorts the narrative about ownership concentration in agriculture.
Ouch. Better in some ways and worse than others than the restaurant business, I reckon.
My mom's relatives have a long horn "farm" complying with the minimum requirements to claim various tax exemptions. :sigh: Their family business is aviation real estate, services, equipment, and aircraft.
I can walk to where sorghum and field corn is grown here in hill country because that's the major trade in these parts, apart from selling land for new housing developments.
Is this different from factories not being owned by the assembly line workers? Not saying it is right or wrong but I wonder why farming is treated differently. Even for me, seeing this headline makes me feel bad for farming and the idyllic view I have of it.
in the long view, much of the US's economic success (prior to the post-wwii economic miracle) can be attributed directly or indirectly to cheap and plentiful food. this of course means that farming is not a very profitable business. but that could change if a handful of large corporations buy up a plurality of the farms and exert their monopoly power to push prices up. this would be very bad.
Most F1 pilots do not own the cars, the race tracks, or even the suits they're wearing while driving. Neither do they own the F1 organization, the F1 brand or any of the technology involved.
We detached this comment from https://news.ycombinator.com/item?id=44738071 and marked it off-topic. It's not OK to follow users around HN and attack them for things they've posted in other threads, no matter who they are, what the topic is or whatever was in the original comment that you found objectionable. That's not what we do here.
Part of the land — 120 of the nearly 700 acres — is rented from a family who owns multiple farm properties and wants their fields weed-free with perfectly straight grids of crops, a deep-rooted tradition among Midwestern farming communities.
“They want that land to be clean corn and soybeans,” Bishop said. Before the restrictions, his father was growing organic corn and soybeans on part of the field and letting Bishop grow vegetables on the rest.
I've seen this mentioned elsewhere, but the idea that you'd force someone else to create a mono-crop desert, not even out of a sense of efficiency, but _just because it looks right_, is just so frustrating.
The US needs another Orville Freeman, someone who understands the intricacies of both economics and food production. Pretty much no-one in a position to affect subsidies and the legal system has a clue. And this isn't unique to the USA, watching Clarson's Farm is a prime example of a bunch of know-nothing politicians screwing things up. Which is how for example in TX, half of the rural community is getting AG exemptions on their property taxes, while not actually producing anything other than tax dodges.
from that link: "Etymology: Not known with certainty. Two long-held hypotheses are as follows: One describes combat soldiers wistfully wishing to go back home, buy a farm, and live peacefully there; later, after they had been killed in combat, their fellow soldiers would say that they had bought the farm (compare the established metaphor pattern of having gone to that big [whatever sort of nice place] in the sky). Another links the phrase to the idea that governments compensate farmers whose land is damaged by a military aircraft crash; a deceased pilot was thus said to have bought the farm, and the term eventually entered wider use."
If you want to be part owner of agricultural land, I couldn't recommend AcreTrader more. I've been investing with them for a few years now and the overall experience has been great. Too early to discuss profits yet as most investments are on a 5-10 year horizon.
38 comments
[ 4.5 ms ] story [ 55.5 ms ] threadIn Judaeo-Christian scriptures, the prohibitions against anyone acquiring ownership of land go all the way back to the Torah.
Though like pretty much every religious prohibition on behaviors which the well-to-do want to do - those commandments fall under the "we never talk about that part" rule.
EDIT:
- Please note my "against anyone ACQUIRING ownership of" phrasing, above.
- Details are in Leviticus, Chapter 25
Vertical integration can have benefits, but it isn't necessary and has drawbacks. Even when vertically integrated, regulations are often written under the assumption that everything is leased, not owned, so compliance is easier if you own a company that owns an asset, instead of owning that asset directly.
For example, if two people carpool in a car that one of them owns, instead of hiring a taxi, they'll usually split the costs of the fuel and the wear on the car. On the other hand, if they were flying in a small airplane owned by one of them, it's illegal to split the costs of wear on the airplane, unless its a rental or air taxi. Because of this, and other similar effects of FAA regulations, many small airplane owners own a company that owns the airplane, instead of owning it outright, and rent the airplane from themselves, whenever they use it.
> More than 22% of the farmland in 12 Illinois counties with the highest rents is owned by a business entity, defined as an operation with an LLC, Inc, LTD, Co., Corp, LP or LLP tag. Sangamon and Edgar counties were included in this analysis because historical data was not needed.
The TL;DR is that Illinois is one of the few states where there aren't restrictions on farmland owners, and even there it's a small (if growing) problem.
I think this is one of those problems that should theoretically be self-limiting. The economics of a farming family owning their land is too strong - just from the amount of tax breaks and subsidies available. Put another way, the land in a farmer's hands is worth more than in a corporation's.
I think the real risk comes from large farm landholders who want to cash out of their farm but don't have an heir or successor lined up. Farmers are getting old and their kids more often than not don't want to run the family farm anymore and there simply aren't going to be any other buyers.
I would also push back on the notion that owner-operators are in a better position. It's more accurate to say that farmers who have assets of any kind are better off than those who don't have assets. As an example, generations back in my family we owned a lot of farmland. There were some bad investments made in the farming operation and we almost lost it all. This was in the early 1980s for those who are familiar.
If my grandfather had sold all of his land and equipment in the late 1970s and invested it in the recently-started Vanguard group, rather than re-investing in the farming operation, then my family would be wealthy. Now expecting a farmer to know about index investing and to bet on it when it was just starting is unreasonable. But it's a good lesson in diversification.
When people lionize farming owner-operators, they discount the risk that owner is taking by having so many assets concentrated in one operation. Now farmers do know about investing and diversification, and some do make the rational decision to cash out. Many also don't, for various reasons.
But it's not totally fair to expect farmers to behave differently than other asset owners because farming is seen romantically or in terms of national security.
This is a different argument than one which would decry the position of tenant farmers. Obviously being a tenant farmer owning nothing but equipment is harder than being a farmer who has $5 million invested somewhere else and rents the land he farms.
Farming is a terrible business. My few hundred acres (maybe worth $5M) will only churn out a few hundred grand in profit -- not even better than holding t-bills. The margins get better as you get bigger but still not great.
Many of the buyers keep growing their farms because it's a status symbol. Everybody in your area will instantly know you're a big wig if you're one of the X family who has 2,000 acres all without the ick that comes with running other businesses. You can't buy that kind of status in my community with anything other than land.
A limited company owning the "land" which is then leased to the "farm" business that works it.
Possibly a "group" parent company is owned by the actual farmer.
I'm sure there will be good tax and legal protection reasons to structure farms in this way, not forgetting various government schemes which bring in revenue via grants and tax breaks.
Edit: my (extended) family has a farm, and they cultivate X0,000 acres every year, though they own far less. They do plant a larger area than most for their community, but they’re not planting 20x their neighbors.
Reminds me of when, a few years ago, the outrage headlines were "half of all US corporations didn't pay income tax last year!"
When one dug into it, it was because half the corporations didn't make any money that year.
My mom's relatives have a long horn "farm" complying with the minimum requirements to claim various tax exemptions. :sigh: Their family business is aviation real estate, services, equipment, and aircraft.
I can walk to where sorghum and field corn is grown here in hill country because that's the major trade in these parts, apart from selling land for new housing developments.
Cute it's a status symbol. But that just screams market inefficiency ergo everyone worse off.
Isn’t this the historical norm? Anyway, we don’t live in a communist utopia, so most people don’t own their workplace, farmers or not.
“They want that land to be clean corn and soybeans,” Bishop said. Before the restrictions, his father was growing organic corn and soybeans on part of the field and letting Bishop grow vegetables on the rest.
I've seen this mentioned elsewhere, but the idea that you'd force someone else to create a mono-crop desert, not even out of a sense of efficiency, but _just because it looks right_, is just so frustrating.
they should have noted _what percentage_ of farmland is owned by out-of-state businesses; otherwise the 250% increase isn't meaningful
https://en.wikipedia.org/wiki/Orville_Freeman https://ers.usda.gov/sites/default/files/_laserfiche/publica...
it's not a new phenomenon, most people who bought the farm do not follow through and till that land...
ok ok, i'll stop. to people who are not native speakers of US English, "bought the farm" is a euphemism for dying https://en.wiktionary.org/wiki/buy_the_farm#English
from that link: "Etymology: Not known with certainty. Two long-held hypotheses are as follows: One describes combat soldiers wistfully wishing to go back home, buy a farm, and live peacefully there; later, after they had been killed in combat, their fellow soldiers would say that they had bought the farm (compare the established metaphor pattern of having gone to that big [whatever sort of nice place] in the sky). Another links the phrase to the idea that governments compensate farmers whose land is damaged by a military aircraft crash; a deceased pilot was thus said to have bought the farm, and the term eventually entered wider use."