Most Illinois farmland is not owned by farmers • Hacker News Board

Re: Most Illinois farmland is not owned by farmers

#251

Post by tim333 » Thu, Jul 31, 2025, 12:17 PM UTC

arbor_day wrote: post #62

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…

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.

Re: Most Illinois farmland is not owned by farmers

#252

Post by 9rx » Thu, Jul 31, 2025, 12:26 PM UTC

dataflow wrote: post #244

9rx wrote: post #127

Earlier quoted context omitted.

I own both a farm business and non-farm business. I feel the "ick" he talks about. I don't know how to exactly describe it, but I'd suggest it has to do with more autonomy in non-farming businesses, where you are always trying to balance between trying to make the business work and not taking advantage of people. Or if you end up taking advantage of people... In farming, it is all laid out for you. Prices are already…

> I don't know how to exactly describe it, but I'd suggest it has to do with more autonomy in non-farming businesses, where you are always trying to balance between trying to make the business work and not taking advantage of people. Or if you end up taking advantage of people... What about all the non-organic farming, use of pesticides/antibiotics/etc., poor treatment of animals (sometimes), water waste in some case…

> What about...

That is all much the same as the prices being set in Chicago: Someone else has made the decision. While someone else no doubt feels the "ick", I am but the customer who is being taken advantage of. (Well, except in the case of Monsanto — they closed up shop years ago)

> Your average local job (waiter...

It seems you, deep down, even understand that. Comparing farming to being a waiter as opposed to the restaurant owner, I feel, is a pretty good portrayal of the difference and it is telling that you chose that point of comparison. Technically farming is like owning the restaurant, but in practice, because everything is laid out for you and decisions are made elsewhere, it feels more like being the waiter. You are layers removed from the "ick".

Re: Most Illinois farmland is not owned by farmers

#253

Post by [deleted] » Thu, Jul 31, 2025, 12:52 PM UTC

potato3732842 wrote: post #243

toomuchtodo wrote: post #215

Earlier quoted context omitted.

https://en.wikipedia.org/wiki/Conforming_loan I love government subsidies through implicit and explicit loan guarantees. It’s the reason a 30 year mortgage exists. It’s the reason one can default on an FHA mortgage with almost no consequences (while being almost impossible to default on student loan debt). To your point this is “subsidized by the rest of us,” the bottom 50% of American earners only pay 2.3% of total…

>I love government subsidies through implicit and explicit loan guarantees Like student loans? >It’s the reason a 30 year mortgage exists. Which is a large part of the reason houses cost what they do. >the bottom 50% of American earners only pay 2.3% of total federal income tax collected, "Well the poors aren't paying for it, you are" isn't the endorsement you think it is. And the poors still get kicked in the dick b…

[deleted]

Re: Most Illinois farmland is not owned by farmers

#254

Post by lotsofpulp » Thu, Jul 31, 2025, 1:41 PM UTC

pfannkuchen wrote: post #142

lotsofpulp wrote: post #133

Earlier quoted context omitted.

Some land does. A lot of land does not.

I think this is strictly not a true statement? Land value can decrease in real terms at the same time inflation is happening, sure. But it isn’t revalued by inflation in the way that a contract denominated in the inflationary currency is. Can you explain more about what you mean?

I don’t understand what your comment could mean.

You buy land at time t for price x. You sell land at time t+1 for price y. If (y-x)/x is is less than the same calculation for whatever other asset you would have bought (I would use sp500), then you lost money.

Re: Most Illinois farmland is not owned by farmers

#255

Post by lotsofpulp » Thu, Jul 31, 2025, 1:46 PM UTC

toomuchtodo wrote: post #212

potato3732842 wrote: post #211

Earlier quoted context omitted.

"Ag" is the keyword there and I suspect it roughtly translates to "somehow tax subsidized by the rest of us". Go try and get a loan on residential/industrial or otherwise non-ag land and get back to me. Everyone looks (i.e. does their due diligence) and nobody ever goes for it because the rates or terms are always laughable. Since you're an expert link poster why don't you cherry pick us all up some of those underwri…

I can have a wholesale originator (UWM) extend me credit for those use cases in ~15 minutes up to almost $1M at 7% (conforming, ready for sale into the ABS market), which is very reasonable imho. I can get up to $5M within a few days if it’s commercial through one of the commercial banks I work with (Wintrust). 80% LTV, most of the time. Guidelines are openly available at Fannie Mae, Freddie Mac, and USDA websites (u…

This is news to me. Are you saying you can borrow money with the stated intention to speculate on future sale price, from the government no less?

I have no experience with farmland, but for other purposes such as building hotels/retail/etc, you can't just get a loan for the land, you buy the land with cash and then get a construction loan to start development. I assumed you would have to at least need to have a plan to operate a farm to get a loan.

Re: Most Illinois farmland is not owned by farmers

#256

Post by lotsofpulp » Thu, Jul 31, 2025, 1:55 PM UTC

dismalaf wrote: post #140

lotsofpulp wrote: post #131

Earlier quoted context omitted.

Land can’t be financed, businesses can be financed. Businesses that own land are much more easily financed, with the lowest interest rates. When you buy land to develop, you have to pony up cash for it. I have never heard of a lender lending without a cash flow producing asset as collateral.

You've got it backwards. Hard assets like land, buildings (aka. your house), machinery (a tractor or your car) are all much easier to finance than businesses. A simple Google search gives a wealth of resources for someone looking to finance (aka. mortgage) land and/or property for a farm. https://www.farmcreditil.com/Products/farm-loans There's even government grants and loans to help: https://www.fsa.usda.gov/resour…

My point is those hard assets have to be used for a business, not for price speculation (as far as I know). Your second link says:

>Farm Ownership Loans offer up to 100 percent financing and are a valuable resource to help farmers and ranchers purchase or enlarge family farms, improve and expand current operations, increase agricultural productivity, and assist with land tenure to save farmland for future generations.

What is "assist with land tenure to save farmland for future generations"? Is that speculating for future price increase?

Re: Most Illinois farmland is not owned by farmers

#257

Post by 0_____0 » Thu, Jul 31, 2025, 2:26 PM UTC

jckahn wrote: post #95

libraryofbabel wrote: post #82

Earlier quoted context omitted.

> 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.)

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

Maybe a nit, but In Illinois it's unlikely that what's being farmed goes into people's mouths generally. Corn (not your sweet corn, but field corn) and soy mostly go into other industries e.g. biofuels, animal feed, chemical industrial inputs etc.

Re: Most Illinois farmland is not owned by farmers

#258

Post by insane_dreamer » Thu, Jul 31, 2025, 2:28 PM UTC

libraryofbabel wrote: post #145

TimorousBestie wrote: post #103

Earlier quoted context omitted.

There’s an exceedingly strong cultural drive to keep farmland “in the family” even if it impoverishes or otherwise inconveniences the descendants. I had a coworker once who lives in this region and owns some amount of farmland in a similar situation. He could have sold it and moved his family to at any point; even now I think it would be easily done, if not as easy as in the past. But of course he still lives there,…

Yeah, that rings true. I assumed when asking my question that this was something to do with culture, identity, and social status within a particular community. In this case the culture (rural America) is alien to me. But I can understand the idea of making economically "irrational" choices for reasons to do with pride or culture or identity, though in the world I grew up in it's more things like become a classical mu…

> none of those things involve the allocation of $5M of capital,

they might if you count opportunity cost (ok not $5M but you get my point)

Re: Most Illinois farmland is not owned by farmers

#259

Post by dismalaf » Thu, Jul 31, 2025, 3:26 PM UTC

skeezyboy wrote: post #247

dismalaf wrote: post #191

Earlier quoted context omitted.

> I probably wouldn't buy them on margin tho. Yeah, this is the pertinent detail. The whole point is putting down only a fraction of the amount. When you calculate the rate of return on a financed property, the rate of return is versus the capital you put down, not the value of what you financed. Plus accruing equity in the property is part of the return. If you put down $1.25 million and you get a $5 million propert…

You say you only calculate rate of return on the "capital you put down"...Im not following here, do you think because youre spending profit from the farming operation that loan for the farm is paying for itself? The tbills pay for themself.... you have to work the farm for 20 years to pay back that 5 million. Its an apples and oranges comparison there.

You're right, it's not an apples to apples comparison, just like running any business will yield more than straight investments.

But opportunity cost is a thing. No land equals no farm and no opportunity for that return.

If not farming, what kind of job can the would-be farmer get and how would they accrue enough capital for their return on T-bills + income to equal their farming income paying off the land? Also my calculations didn't consider that the land value would rise, which it almost assuredly would.

Re: Most Illinois farmland is not owned by farmers

#260

Post by dismalaf » Thu, Jul 31, 2025, 3:34 PM UTC

lotsofpulp wrote: post #256

dismalaf wrote: post #140

Earlier quoted context omitted.

You've got it backwards. Hard assets like land, buildings (aka. your house), machinery (a tractor or your car) are all much easier to finance than businesses. A simple Google search gives a wealth of resources for someone looking to finance (aka. mortgage) land and/or property for a farm. https://www.farmcreditil.com/Products/farm-loans There's even government grants and loans to help: https://www.fsa.usda.gov/resour…

My point is those hard assets have to be used for a business, not for price speculation (as far as I know). Your second link says: >Farm Ownership Loans offer up to 100 percent financing and are a valuable resource to help farmers and ranchers purchase or enlarge family farms, improve and expand current operations, increase agricultural productivity, and assist with land tenure to save farmland for future generations…

> My point is those hard assets have to be used for a business, not for price speculation (as far as I know). Your second link says:

Banks will let you finance any land if you have a way to pay for it. They'll let you mortgage some plot of land in the middle of nowhere if you have the income to pay for it.

A farm is income. A future farm is a business plan. But if you want to speculate on land from the city and work an office job, yeah, they'll give you a loan for that too.

> What is "assist with land tenure to save farmland for future generations"? Is that speculating for future price increase?

Pretty much yeah.