This article makes one wonder if the University is forgetting it’s roots. Endowment farms may have been given to provide scholarships for students, but I also assume the donors thought the University would continue to allow local farmers to earn a living from the land. Switching to open bids and cash rent agreements may make the process more agreeable with State procurement laws and maximizes the income from the endowment, but it sure hurts the small family farmer. And it raises cash rents on surrounding land.
Land of the Lemmings v2
common sense and reasoning will not be tolerated
In a counter point to the emotional appeal being made in the Chicago Tribune, and here on this blog; I think the University is well within its right to auction off land to the highest bidder. The State of Illinois has cut funding to the University. People scream when tuition costs go up. The university needs to monetize as many assets as it can to remain competitive, and remain fully funded. This was an asset that clearly was not allocated efficiently.
Farmers will have to pay market rates for land, just like everyone else. If the university wants to conduct science experiments on the land, with new farming methods, seeds and genetics, they ought to subsidize the farmers for the difference in crop value versus standard crops. The days of the family farmer are over. They have been over for a long time. Most of the agricultural subsidies doled out by the Federal government go to corporations, and absentee land owners that lease their land for crop production.
To ignore simple economic principles is a disservice to the people of the state, and the University itself.
(How the heck did you find this whiny post on a blog that only my friends and family read?)
This just hit home in too many ways for me to ignore.
I’m both: an employee of the University of Illinois AND a Central Illinois farm kid whose Dad farms less than 1000 acres.
As the University employee, it behooves me personally to advocate that the University maximize it’s income from the farmland. Every dollar that the University can earn from endowments frees up dollars that can go to pay my salary and adequately fund my, and others, projects.
As the only heir of a small family farm operation, I have to hope that the University sees the reasoning behind trying to keep small family operations in business.
Maybe I need to let go of the past and grasp the fact that family farms are doomed and the government and industry are actively trying to eliminate them.
If Jeff continues to read this: He brings up some good points.
-This is not “simple economic principles”. Do you always look for the “cheapest” way to do something? While I may buy the cheapest gas I typically buy other things when there is a better value or gain. I think when looking for farm tenants you don’t want the one who will give you the highest price but find the one who will give a fair price that you know is stable, honest, and will be a good steward of your land. Farmers (either who cash least or share crop) need to work as a partnership so both can win in the long term not just a short term gain. From my experience, the tenant offering the highest lease is not always the best.
-Also, many land owners have life long commitments to their tenants and for some this breaks the spirit of the endowment for the current landowner to have a fair right to continue to lease the land. If that was the case it should have been more clear of the agreement for a family to have the right to farm at appraised value. Yes, it shouldn’t be a handout and should be at fair market value and the farmer’s upkeep of the ground should be monitored. I’ve seen farmers with short term leases pay high price only to rape the land for fertilizer and give it back which then costs everyone more $$$ to get the land back in shape.
-Some would even say if the University wanted to maximize benefits, they would do more share crops and work with the farmers more instead of simple case leases.
-This is a very complicated topic and while I’m sure there are some farmers who may be getting a “good” deal (those contracts should be examined and monitored) and I’d bet the majority are getting fair deals. I’m glad the University is examining the farms but I don’t believe they are doing it in a sensible way and are missing out on truly maximizing the benefit from farms and on the spirit of endowments (if i was a farmer i wouldn’t give my land to the University after seeing this, kinda biting the hand that feeds you…)
-Ya, the family farm has changed, evolved if you will. It is now more partnerships (as more farmers grow and are getting educated about the need for going from private ownerships to partnerships or LLC) but the core are still run and owned by families.
-It is a complicated topic that deserves discussion.
sorry, i linked to your blog from the U of I site. I am not a farmer. However, I can see that there would be fear of a farmer that “raped” the land. However, if I was a landowner, I would put covenants in my contract that forced the farmer to farm the land in not only a productive manner, but in a manner that would not rape the land.
I also think that if I am a landowner that allows my land to be farmed improperly, I am allowed to do that. It is my land. However, unless the land can be converted into industrial use, I will pay long term for the short term profits that I received.
I think that it’s pretty easy to determine a fair market value for land. There is a viable market, a liquid futures market and cash market for crops, and everyone knows what the input costs for seed and gasoline will be (along with equipment rental, or ownership). I am on board with the University getting the fair market value.
As far as small family farmers are concerned, it is a more difficult problem. It is pretty clear to me from speaking with my farming friends in Western Illinois that times changed a long time ago. You either have to take a lot of risk and get big to compete, or perhaps go out of business. You certainly can’t farm the same way you used to. That being said, you can diversify. The good news is there is demand for organic crops that is not being met by large corporate farms. There is demand for more exotic crops from restaurants that is not being met; with the caveat that we can grow them here.
I thought long and hard about getting into a free range pig business with Berkshire Hogs. Then I noticed it was already being done so I figured I was late to the party. By the way, if you can get your hands on some, which you can thru tallgrassbeef.com, it is really good.
If I were a farmer, I wouldn’t donate my land to the big U either. But it would be because I would want to leave it to my kids. The only reason that I see to donate land to the University is because you don’t have a better use for it, and you are trying to avoid death taxes that are imposed when you pass on. (I am against the death tax by the way)
If you reach a good economic solution, then it is the best deal for everyone. There are certainly some externalities that need to be considered. The University should be trying new genetics and farming techniques on their land, so further farm research. This could result in higher costs and lower production in some cases, so the land lease should not be as much.
But just to charge lower prices to keep the “family” farmer in business, I am against that.
BTW, I do always look for the most efficient and economical way to do things. It isn’t necessarily the cheapest. Some costs are not really costs, and you have to consider the opportunity costs. If you just add and subtract accounting costs, you aren’t making the best ECONOMIC decision.
I like your blog. Keep it up. Farming is a crucial industry to this country, and state. I am glad that we have a state university like Illinois that has the best damn Ag dept in the land.
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