NBER Working Paper: Trouble in Farm Succession in the U.S

1 min read
September 2, 2023

Why it matters: Farm succession decisions have significant implications for the future of family farms everywhere (Especially with the developed and most of the developing world as fertility rates are declining). The study, Who (Actually) Gets the Farm? Intergenerational Farm Succession in the United States by Adrian Haws, David R. Just & Joseph Price, using population-level U.S. census records, analyzes the prevalence and timing of farm succession, factors related to successor selection, and the impact of planned versus unplanned succession.

Key findings:

  1. Gender Bias: Sons are favoured for farm succession, with daughters rarely receiving the opportunity. This suggests that gender bias may hinder the continuation of family farms.
  2. Unplanned Succession: A divergent pattern was observed for farm transfers later in the farmer’s lifetime, where a succession plan may not have existed. In these cases, sons inheriting the farm were likelier to live in rural locations and be tenant farmers without their own land. This indicates that the absence of a succession plan affects the outcome of succession.
  3. Historical Insufficiency: The problem of insufficient succession planning has existed historically, leading to less than one-fifth of families having a successor and contributing to declining family farms.
  4. Farm Tenancy: Farm tenancy was necessary for predicting unplanned succession in the past, but its decline over time may lead to fewer options for succession today.

Policy implications: Policies that assist farmers in planning succession, support young farmers by increasing their access to credit or farmland, and improve opportunities for women in farming may help family farms thrive and continue across generations.

The need for better data: While the study provides the first population-level analysis of realized succession decisions, it relies on inferences from historical census data, raising concerns about the adequacy of 20th-century data for addressing 21st-century problems. More systematic data collection, longitudinal studies, and exploration of questions raised by the study, such as reasons for low rates of intergenerational farm succession and the impact of urban migration, could significantly improve our understanding of farm succession.

The big picture: This study highlights the importance of addressing gender bias, planning for farm succession, and supporting young farmers to ensure the continuation of family farms. Future research and policies should consider these factors to address the challenges farming families face and help sustain some competition in agriculture.

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