American agriculture is undergoing a massive change. As of 2018, nearly 60 percent of Iowa’s farmland is owned by people who don’t farm. While some of these owners are retired farmers, about a third of them have no farming experience at all.¹
Agriculture is considered a specialty asset class, and many of these owners may have purchased the land as an investment. But farms face unique challenges and managing them is important for making an agriculture investment worthwhile.
Challenges facing landowners
Farm management requires an understanding of agricultural trends, market headwinds, financing and agricultural technology. In recent years many ranch and farm operators and tenants have also faced a landscape with less working capital and unpredictable swings in commodity prices.
And while many owners may want to keep farmland in the family, issues could arise if the next generation is inexperienced or unwilling to tackle the demands of running a farm.
Specialists from the Farm and Ranch Management Group at U.S. Bank work closely with landowners to help maintain and optimize their farms, harnessing years of firsthand experience. Many are accredited by the American Society of Farm Managers and Rural Appraisers.
“U.S. Bank has been in the farm management business for 70 years,” says Jon Norstog, vice president and western regional farm manager at U.S. Bank. In addition to educating clients on how to effectively manage their farms, Norstog and his team spend plenty of time in the field — literally. “Our job is to represent owners out on the ground,” Norstog explains, “to make sure that the land is being taken care of and that all the potential for income is being realized.”
This on-site work is particularly important because many of Norstog’s clients live far away from their land. “We take a lot of pride in being active on the ground, so our clients have confidence that they’re getting the most from their farm,” he says. Norstog’s advice often gets down into the weeds: He regularly advises clients on weed control, fertilizer use, drainage and other specifics.
Passing down the land
In addition to checking crops and livestock, the Farm and Ranch Management team helps owners by negotiating leases with tenant farmers and serving as an unbiased third party. And when it comes time for farm owners to pass their land to their children or other heirs, the team is on hand to guide the transition.
“Farms are something that people hold near and dear to their hearts,” Norstog says. Many farm owners inherited the land and plan to pass it on to their children. “Holding on to something that has been in the family for generations is something that many clients value,” he says.
One family’s story
For example, two siblings had inherited their family’s corn and soybean farm. Even as second-generation owners, the pair wasn’t fully comfortable with the practical aspects of managing a farm. They didn’t want farm management decisions to negatively affect their relationship. They also worried that the farmer who leased their land wasn’t paying them fair market value and that weed and drainage issues weren’t being adequately addressed.
The Farm and Ranch Management team helped address the siblings’ concerns, resulting in generating additional income and ensuring proper soil and drainage management, thus making the farm a more valuable asset. All this gave the siblings peace of mind that their land would be taken care of without jeopardizing their relationships with their neighbors or each other.
Whether it’s helping a client decide between a cash-rent or crop-share lease, or planning crop rotations, Norstog’s team avoids a one-size-fits-all approach. Advice is tailored to individual needs and local conditions, so landowners can be confident that their land is managed with knowledgeable care.
¹ Iowa State University Farmland Ownership Tenure Survey, 2018.