Farmer Retirement and Disinvestment in the U.S

One of the major demographic trends in the US is the aging of farm operators and landlords suggesting transition of farm ownership in the form of exit and disinvestment. This coincides with economic pressures on farmers incomes due to recent market volatility. We model retirement age farmers exit/disinvestment as the outcome of intertemporal utility maximization and identify the extent to which economic and demographic factors affect these choices using the Census of Agriculture farm-level data for the 1992-2012 period. Regression results highlight the role of demographic factors. Minority and female farmers are more likely to exit but female operators are less likely to disinvest, while family farms are less likely to exit. High sales farms are less likely to exit but more likely to disinvest possibly targeting a smaller production scale before retirement. The relative size of the non-agricultural economy is negatively associated with exit but positively with disinvestment, while off-farm work reduces exit probability only a little. However, flow economic variables such as return-on-assets and government payments do not seem to impact exit and disinvestment. These findings are largely consistent with the view that mainly demographic factors and size determine farmers decisions to retire, which has important policy implications. Acknowledgement :