Agriculture Reference
In-Depth Information
to distinguish the landowners from the farmers. During any given year, a “farmer” may
cultivate his own land and lease the land of another landowner; a “landowner” may farm
some of his own land and lease the rest of his land to another farmer. In 1997, only 60
percent of all American farms were operated by individuals who owned all their farmland
and only 34 percent of all American farm acreage was cultivated by farmers who owned all
of their land.
14
A specific contract will distinguish between a farmer and a landowner, but
it is important to realize that in North America, unlike other parts of the world, no real class
or economic difference exists between farmers and landowners.
Until recently, many economists have argued that share contracts tend to wither away as
economies develop.
15
But share contracts have flourished in American agriculture through-
out this century and continue to be widespread. In the first half of the twentieth century,
some economists were aware of this. Gray et al. (1924) noted that in 1920 cropshare con-
tracts were more common than cash rent in most states. Similarly, Johnson (1950) stated
that “three-fourths of all rented agricultural land is leased under share contracts” (111).
In fact, the cropshare contract is pervasive over the entire Great Plains, which is one of
the world's most developed agricultural regions.
16
Our 1986 data show that over 75 per-
cent of all landowner-farmer contracts in Nebraska and over 62 percent of all contracts in
South Dakota were cropshare agreements. Our 1992 data show that 29 percent of contracts
in British Columbia and 67 percent of contracts in Louisiana were cropshare contracts.
Sotomayer, Ellinger, and Barry (2000) find that 70 percent of all contracts in Illinois are
cropshare. Similarly, Tsoodle and Wilson (2000) find more than 70 percent of all contracts
for nonirrigated land in Kansas are cropshare. Table 2.4 provides some information on mod-
ern farmland contracts across the United States, and for the four areas we examine. It is clear
from this table that leasing is important and that there is considerable variation in the use of
the two different lease agreements.
17
The use of cash and share contracts also varies sub-
stantially across regions of the United States. For example, in the Great Lakes region cash
rent accounts for roughly 80 percent of all leases, while on the Great Plains they account
for 50-55 percent of all leases (1999 AELOS, table 99).
In the past some economists have argued that landowners meticulously monitor the inputs
of their cropshare farmers (for example, Eswaran and Kotwal 1985). But our evidence
is to the contrary. Landowners seldom monitor farmer inputs, and then only in the most
casual fashion—directly measuring farmer efforts and timing are unheard of. The fact that
many landowners are absentee, living outside the county or state in which the rented land
is located, supports our contention that direct monitoring of inputs by landowners is rare.
In Nebraska, South Dakota, and Louisiana, over half of the landlords live in a different
county from their leased farmland. Of these, close to half live in a different state. In British
Columbia, 23 percent live in a different region or province.
18
Monitoring output, however,
