2018 Market Outlook MeetingsDate: Jan 10 - 25, 2018
Hear from industry professionals at one of our upcoming grain market outlook meetings. 14 meetings will be held to better serve our member-owners.
AMES, Iowa – Many farmers nearing retirement have not identified successors who will take over their operations. The Iowa Farm and Rural Life Poll: 2014 Summary Report (PM 3073), indicates that fewer than half of the farmers surveyed have identified successors for their farm operations.
“In 2012, just 18 percent of the state’s farmers were under 45 years of age,” said J. Gordon Arbuckle, sociologist with Iowa State University Extension and Outreach. “With nearly 60 percent of Iowa farmers over the age of 55, discussion of farm succession is common and this year’s survey sought to learn more about farmers’ retirement and succession plans.”
According to the 2012 USDA Census of Agriculture, the average age of Iowa farmers is 57, and farmers who are age 65 and over made up nearly 30 percent of Iowa farmers. “The average age of Iowa farmers has increased steadily over the last several decades,” said Arbuckle.
“There are four times as many Iowa farmers over the age of 65 as under the age of 35,” said David Baker, farm transition specialist at the Beginning Farmer Center with ISU Extension and Outreach. “The more we know about farmers’ plans for the future, the better. Knowledge of farmers’ thoughts about and plans for retirement can help us to better match our programs to the needs of farmers and successors,” said Baker. Survey questions were developed in collaboration with staff from Iowa State’s Beginning Farmer Center.
Farmer Retirement Plans
In the survey, farmers were provided eight categories regarding retirement plans and were asked to select the one that best applied to them. The most frequent response, at 20 percent, was “I expect to semi-retire from farming.” Fifteen percent of farmers responded as “already semi-retired” and another 15 percent selected the “would never retire” category. Fourteen percent planned to retire within five years and another 14 percent planned to retire in 6 – 10 years.
Since one-third of Iowa farmers are over the traditional retirement age of 65, one of the objectives of the survey was to ask farmers their opinion about why so many farmers delay retirement. When asked to rate the importance of a number of possible reasons, the top-rated reason was that “farming is such an important part of [a farmer’s] identity that retirement is very difficult.” The second-highest rated reason was that modern equipment allows farmers to farm longer than they used to.
Several reasons were rated as important or very important by about three-quarters of respondents: that farmers stay healthier longer (75 percent); they love farming too much to stop (75 percent); they don’t know what else they would do with themselves (73 percent); and, they do not want to relinquish control of the operation (73 percent). The two lowest-rated reasons, both at 39 percent for important or very important, were that young people are not interested in farming, and that farmers cannot afford to retire.
Farm Succession Plans
Overall, 49 percent of farmers had identified a potential successor that will eventually manage the farm operation. “If we look at farmers who reported that they will retire in the next five years, the number is a little higher, at 55 percent,” said Arbuckle. “But that still leaves 45 percent of farmers who will be retiring soon and do not have someone who will take over.”
Of those farmers who had identified a successor, 74 percent indicated that one of their children would carry on the farm operation. About 12 percent of respondents reported that their successor would be a relative such as a nephew or niece, and 14 percent reported that a non-related person would take over the operation. The successors, on average, were 37 years old.
Plans among farmers who had not identified a successor
Farm Poll participants were asked what would happen to their farm operation when they no longer managed it. Among the farmers who had not identified a successor, the most common plan was to rent out land. “Overall, 35 percent of farmers without successors reported that they would rent out land,” Arbuckle said. “But more than half of farmers who planned to retire within five years indicated that they would rent land, 19 percent did not know what would happen to the operation, and 17 percent planned to sell their land.”
“If farmers do not have successors for their farms, then those businesses will fail to continue,” Baker noted. “If rural Iowans do not enhance and create opportunities that attract the next generation, then the next generation will migrate away. We will continue to see consolidation of farm businesses into fewer, larger farms.”
Baker explained the Beginning Farmer Center works in conjunction with ISU Extension and Outreach program staff to offer materials, speakers and support to help beginning and exiting farmers. “We have resources for farmers who need help with succession planning, like the Ag Link program, which helps families make the transition to a multiple generation farm business. We match beginning farmers who don’t own land, with retiring farmers who do not have heirs to continue the family farm business,” Baker said.
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