Land tenure and profitability among young farmers and ranchers

PurposeThe purpose of this article is to investigate how land tenure correlates with measures of profitability among young farmers and ranchers in the United States. The authors hypothesize that young producers who own a larger proportion of their operation face different incentives between short- a...

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Bibliographic Details
Published in:Agricultural finance review 2022-04, Vol.82 (3), p.486-504
Main Authors: Stevens, Andrew W, Wu, Karin
Format: Article
Language:English
Subjects:
Agricultural production
Agricultural resources
Agriculture
Best management practices
Careers
Crops
Economics
Expenditures
Family income
Farm income
Farmers
Farms
Genetically altered foods
Incentives
Income
Land ownership
Land tenure
Landowners
Livestock
Livestock farming
Maintenance
Maintenance costs
Profitability
Resource management
Resource surveys
Return on assets
Return on equity
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Summary:PurposeThe purpose of this article is to investigate how land tenure correlates with measures of profitability among young farmers and ranchers in the United States. The authors hypothesize that young producers who own a larger proportion of their operation face different incentives between short- and long-run returns than young producers who primarily rent their land. The authors analyze whether these differing incentives result in observable differences in various measures of profitability.Design/methodology/approachThe authors use state-level data from the Agricultural Resource Management Survey (ARMS) from 2003 to 2018 to estimate fixed-effects panel models correlating land tenure with the value of farm production, expenditures on repairs and maintenance, net farm income, total operator household income from farming, rate of return on assets (ROA) and rate of return on equity (ROE).FindingsThe authors find different correlations for crop farms and livestock farms, as well as different correlations for farms with the lowest and highest gross sales. For crop farms, renting land is associated with higher production, higher income, higher ROA and higher ROE. For livestock farms, renting land is associated with lower production.Originality/valueThis study rigorously investigates the role of land tenure specifically among young farmers and ranchers in the United States. By better understanding how land ownership affects profitability among beginning farmers and ranchers, policymakers will be able to better target public resources to support the next generation of producers.
ISSN:0002-1466
2041-6326
DOI:10.1108/AFR-04-2021-0048