Document Type


Publication Date



Economics Department

Circular Number



farm rental, farm lease, agricultural economics


Should farmers and ranchers who rent or lease their land have the freedom to operate as efficiently as those who own their land? Many people agree that they should. Those who do not are saying that lease conditions may be impared which interfere with the efficiency of two-thirds of the farmers and ranchers in the state who were leasing all or part of the land which they operated in 1954. Better leases, it may be argued, will remove the incentive of tenants to become owners. While this may be partially true, it appears that a high degree of ownership of farms and ranches by those who operate them is not likely to be achieved. The percentage of farm tenancy increased steadily from 1880 to 1940. Since 1940, tenancy has decreased largely as a result of the high incomes during World War II and the Korean conflict. This can be seen in table 1. Part owners-operators who own part of their land and lease part-are the fastest growing tenure group. Full owners have increased more slowly. The drop in incomes since 1954 may again be increasing tenants at the expense of full owners. This trend in farm tenancy was an important reason for the establishment of the Federal land bank system in 1916 and the ill-fated South Dakota Rural Credit Department which started lending operations in 1917 and closed in 1925. In 1933 the national Emergency Farm Credit Act was passed which made possible the Land Bank Commissioner loans. Later the Federal land banks were authorized to make loans up to 65% of the normal agricultural value of the farm and its improvements. The Bankhead-Jones Farm Tenant Act was passed in 1937 to permit tenants to buy farms. Despite these efforts only 32% of the farmers and ranchers were full owners in 1954. Another 29% were full tenants and 39% were part owners and part tenants. Only 17% of the agricultural land in the state was operated by full owners, 18% by full tenants, and 63% by part owners-part tenants. These figures can be seen in the last line of table 2. For the entire state, 46% of the agricultural land was leased in 1954. In some counties the figure was considerably higher. For instance, in Moody County 59% of the farm land was leased in the same year. In view of the importance of farm tenancy it seems that some effort should be made to eliminate from leases the most important causes of inefficient farming and ranching.










South Dakota State State College of Agriculture and Mechanic Arts, Agricultural Experiment Station