Land tenure and profitability among young farmers and ranchers
Journal
Agricultural Finance Review
Journal Volume
82
Journal Issue
3
Start Page
486
End Page
504
ISSN
0002-1466
Date Issued
2021-11-26
Author(s)
Stevens, Andrew W.
Abstract
Purpose
The 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/approach
The 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).
Findings
The 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/value
This 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.
Subjects
Land ownership
Young farmers and ranchers
Beginning farmers and ranchers
Production
Farm income
Profitability
SDGs
Publisher
Emerald
Type
journal article