Probably nothing in agriculture has angered farmers more than the release of details about farm program payments they have received. When the USDA was forced to reveal who received how much in commodity and conservation payments, those names of farmers began to appear in the media with expected retaliation from tax payers. However, the information from the once-private files is being used to identify information about absentee landlords that will be used to develop future commodity policies. And we have an example.

About half of US farmland is operated by someone other than the owner, and when commodity payment information is associated with operators and landowners, USDA economists can determine how farm program payments relate to the actual farm operation. USDA ag economists Michael Brady and Vince Breneman analyzed the information released by USDA for the 2004 crop year. They wanted to determine where payments were being sent in relation to the farm, the use of cash rent versus crop share leases, and whether the ethanol tax credit benefited farm operators or farm owners. You will not find any individual names in this summary of that research.

The 20th Century saw a great transition from farms being owner operated to farms being operated by someone other than the owner. Division of estates further separates owners from their land, by more than just distance. The economists believe this also impacts the health of the rural economy, since money flows out of rural areas into urban areas. The USDA goal is more focused on rural areas, and the economists say the FSA payment information details the location where USDA money is going.

USDA’s 1999 survey of land ownership found that non-operator landlords owned 221 of the 434 million acres of US cropland, most lived within 50 miles of their farm, and most were retired farmers. Since their average age was 63, a lot of ownership would be changing in the near future. Owners over 70 years of age numbered more than the next younger age categories, and the older group increased its holdings by 40 million acres in the decade preceding the 1998 survey. Both the older age group, and their children in the next younger aged groups are likely candidates for cash rental agreements, instead of crop share.

The USDA ownership information covers 2.3 million entities or individuals and includes addresses where checks were sent, the amount, and the reason for the payment. For their study, the economists used 1,381,949 accounts with payments exceeding $15 billion. Since farm program payments are not supposed to be sent to cash rent landlords, the economists estimate the checks were going to crop share landowners. All of the payment recipients were divided into four groups, rural addresses in the same or a different county, and urban addresses in the same or a different county. What they found out:
1) Slightly more than half of all payments4 are sent to the farm or a rural area in the county of the farm.
2) The next largest category is urban, but another county at 17.39%.
3) 27% of the payments went to urban addresses, either the same or another county.
4) It does not appear that there are a significant portion of absentee landowners living in rural areas that are at a significant distance from the farm, which is expected given data from other surveys.

The USDA economists looked at the trends in several Cornbelt states.
1) Looking at the state of Illinois, which has a high percentage of non-operating landlords, approximately half of all checks were not sent to a rural address in the same county as the farm. More than 30% went to urban areas either in or out of the county.
2) If Illinois trends in absentee landlords are similar for cash-rent contracts then a slightly conservative estimate would put the urban, but another county category at a little less than 15%.
3) In Nebraska, 20% of payments are sent to out of county urban landowners. By payment volume the total is only around 5%.
4) The urban, but another county category for Ohio is even smaller at 9% of all payments and less than 3% by volume. When adjacent counties are included in the IU category it constitutes over 90% of the total value of all payments.
5) Values for Indiana and Iowa are more similar to Ohio than Illinois.

Summary:
USDA statistics for distribution of farm payments among farm operators and absentee landowners indicate 28% are sent to urban areas and not farm addresses. Comparing results across states in the Cornbelt show significant variation with Illinois appearing to have more absentee landowners than Ohio, Iowa, or Nebraska. An important question related to the use of the data, and research on absentee land ownership in general, is how land ownership will change in the next decade given the significant amount of farmland owned by people in their 70’s and 80’s.