[arbor_day]

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.

[9rx]

> Farming is a terrible business. My few hundred acres (maybe worth $5M) will only churn out a few hundred grand in profit

Well, it is ultimately a real estate business. The "hundred grand" in profit is really there only to support the mortgage payments — meaning that's what other farmers are counting on, so they're going to drive the prices down to that point. It is like a tech startup. You are counting on the assets increasing in value when you exit. That is where the profit will eventually come from, hopefully. It is not a business for everyone, but I like it.

> Many of the buyers keep growing their farms because it's a status symbol.

And because the fun parts of the job end too quickly when you don't have enough acres. I'd at least like to double my acreage. That is where I think I'd no longer be in a position of "That's it? I want to keep going!" and instead "That was fun, but I think I've had enough."

That said, the machines keeps getting bigger, whether the farmer likes it or not, so perhaps in that future I'll need even more land to satisfy the pangs.

[dylan604]

If you don't need a couple of million dollars worth of tractors, combines, and other equipment that are all driven by GPS then you don't have enough acres.

[HDThoreaun]

What is the thesis for speculating on farm land? Theres no reason for me to think it will appreciate any faster than inflation because demand is stagnant.

[skybrian]

Just wondering: what are the fun parts?

[travisennis]

I was just looking at a GIS map yesterday for my area and noticed that nearly every field was owned by an LLC and/or trust. Didn't think much of it at the time until I read this.

[lotsofpulp]

In richer parts of town, many houses will be in trusts also.

It’s a no brainer if you have a couple thousand dollars to spare for an estate lawyer to do some estate planning and spare your heirs probate court.

Plus in the states and wealth levels that many people on this website have, it is also a no brainer to save on taxes.

[libraryofbabel]

> 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.

Non-judgmental curious question: why do you keep doing it? (As opposed to selling the land and buying tbills.)

[jckahn]

I imagine there's some satisfaction in feeding people that money can't buy.

[appreciatorBus]

> the ick that comes with running other businesses

Also non-judgmental curious question: what is this "ick" related to non-farming businesses?

[dismalaf]

Land can be financed over long periods and held forever. So a few hundred grand will pay off $5 million in about 20 years and then that's steady income forever after (as long as you keep farming).

[mbreese]

It's buried in a figure legend, but the Tribune does acknowledge this too:

> Note: The 12 selected counties had some of the highest cash rents in the state. For the purposes of this analysis, a business entity was defined as an organization with an LLC, Inc, LTD, Co, Corp, LP or LLP tag. This land is not necessarily owned by large conglomerates and investment firms. Corporate structures are also attractive vehicles for family businesses.

Edit: apparently not that buried...

[spyspy]

It's not buried anywhere, it's literally the next paragraph after the lede.

> These acres are not necessarily owned by large conglomerates and investment firms. Corporate structures are also attractive vehicles for family businesses because they offer tax benefits and externalize losses.

[pinkmuffinere]

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.

[arbor_day]

Yeah, it's sorta both big and small.

It's small in that you can't support a family farming 500 acres of corn/beans. It's big in that buying 500 acres would cost $5M - $10M, that's real money!

[potato3732842]

You're projecting "western desert but we pretend like it isn't" norms onto "eastern rich arable land" areas.

[burnt-resistor]

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.

[yieldcrv]

> all without the ick that comes with running other businesses

can you elaborate on this perception?

[Loughla]

As a farmer my customer is the grain elevator, co-op, or sale barn. I don't have to hustle for sales, just play the market.

At least when I still farmed that's what it was. I answered to myself, not to customers or clients.

[smeeger]

its ignorant slop.

[insane_dreamer]

Yeah, I think it would have been more useful if the Tribune had been able to determine "how many people are farming on land which they do not own" whether directly or through an LLC/company.

The amount of land owned by "out of state" owners may help answer this question but they don't give a number for that either. (A local farmer could also register their LLC out of state though I'm not sure whether that's beneficial or not.)

[mindslight]

Setting up an LLC as foreign to the state you're living in likely won't save you on fees (since you'll register it as a foreign entity in your own state, especially for holding title to real estate), but it can open up additional features not offered by your state's laws, like series LLCs. Although as far as I know it's an open question as to whether the protections of Series LLCs will be respected by other states or just discarded when you try to use them.

(I'm not a member of any guilds)

[comprev]

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.

[tim333]

My dad also had a farm in the UK owned through a company for tax reasons. Farming was a loss maker, land appreciation made loads of money.

[dzhiurgis]

How does vertical vs horizontal integration work? I imagine most of specialized gear doesn't make sense to acquire until you are at some scale.

Cute it's a status symbol. But that just screams market inefficiency ergo everyone worse off.

[SoftTalker]

Yep I own one rental house and it's in an LLC. Very common for any property used as a business to have a business owner of record.

[ethan_smith]

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.

[pfannkuchen]

Land does weather inflation quite a bit better than T bills do, though.

[potato3732842]

As a land owner you should be much more worried about state and local laws than what goes on at the fed.

There are millions of Americans who own what would otherwise be "developable and valued as such" land that became basically worthless with the state passage of various environmental laws (particularly wetlands setback stuff) that make the juice not worth the squeeze except if the location were to become "major urban area" level dense while the municipalities passed zoning laws making it all but impossible for that to ever happen.

I guess when you think about it it's not that the land is less valuable. It's that there's no value left after doing what you'd need (endless engineering and construction hoops, lawyers, court, etc) to extract the value without the government just unilaterally deciding you no longer own the land and backing that up with violence.

[arbor_day]

I find Illinois taxes to be scarier for land than other investments.

Illinois state is in a bad financial position, they can't inflate their way out of it. Financial assets are easier to move than land if things get bad.

[lotsofpulp]

Some land does. A lot of land does not.

[smeeger]

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

[9rx]

> there is no type of farming that will beat t bills? none?

There is no type of farming that beats t-bills today if you buy the land today. There is a saying in farming: "Buying farmland never makes sense the day you buy it." The land you bought 50 years ago is looking pretty damn good now, though. The economic bet farmers not cashing out (or buying in) are making is that trend will continue.

[WalterBright]

> so we're all counted as "not farmers" here

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.