Vox has a clever piece on how the current star of The Bachelor, who apparently owns a sizeable chunk of Iowa farmland, has probably seen his net worth erode noticeably over the last year because farmland prices are dropping. The piece gets the reason for this slightly wrong — part of dropping corn prices has to do with the cooling of the ethanol market, which was overheated by unrealistic government-intervention plans — but anyway, it’s true that after a spectacular run-up, farmland prices are dropping somewhat.
That is a real dynamic people might want to know about. This is, maybe obviously, not:
In case you were wondering, there’s good news for anyone seeking to date a millionaire farmer in Iowa: still-high land prices mean it shouldn’t be too hard to find one. Anyone owning around 125 acres at current average prices is technically a millionaire. The median Iowa farm, as of 2007, was 133 acres.
The word “millionaire” means one thing: net worth of more than a million dollars. Not “assets of more than a million dollars.” And farmers almost always carry debt — something actually mentioned earlier in the piece, but not one that the writer thinks is significant when it comes to assessing the fact that they also have substantial assets — meaning that you can’t just own a million dollars worth of land and be a millionaire. That’s the strict way in which this flippancy is wrong.
There’s a more complicated one, too: Because farmers’ substantial assets assets are so key to sustaining their business and weighed down by debt, being a millionaire farmer is a good bit different than being a regular millionaire. The statistics on farmers make them look like a not-particularly-indebted class partly because the USDA counts most everyone who does a bit of farming as a “farmer.” Many dabbling in the business don’t need to take on a lot of debt to do it. But people making a living off of it do, and often have debt-to-asset ratios of 20, 30, or 40 percent, which don’t, like the debt ratios of people with, say, a million-dollar house and a hefty mortgage, drop over the course of their lives. The farm business has changed dramatically over the years but that has stayed more or less constant. One thing that has shifted in places like Iowa is the accumulation of more land by absentee landowners, who get farmers with less pretty net-worth pictures to do the actual farming. Farming is not a bad business, but it’s not a great way to get rich.