Illinois Farmers Choose More LLCs

By Jamie Martin

Farm payments from the USDA Farm Service Agency provide income support and help reduce financial risk for farmers. These payments also encourage conservation practices. However, payment limits may influence how farms choose their business structures.

To qualify for payments, individuals or entities must be actively engaged in farming. They must contribute labor, capital, land, or equipment and be involved in management. Payments made to partnerships, corporations, trusts, and LLCs are traced back to the individuals who own them.

Illinois farm data from 2008 to 2022 shows that while the total number of farms has slowly declined, the number of people farming has increased. At the same time, the number of payment recipients has dropped. This indicates that farms are becoming larger and are operated by more people within fewer businesses.

Five main types of business entities receive farm payments: individuals, partnerships, corporations, trusts, and LLCs. Among these, LLCs are showing the strongest growth trend.

LLCs represented only a small portion of payment recipients in 2008. Over time, their share steadily increased. By 2022, LLCs accounted for a much larger portion of both recipients and payment dollars. This means that larger farms are more likely to operate as LLCs.

Farmers prefer LLCs because they provide legal protection, flexible management options, and easier estate planning. They are also simple to create and maintain compared to other legal entities.

The growth of LLCs does not appear to be tied to any single policy change. Instead, it reflects long-term shifts in farm planning, risk management, and business organization in Illinois agriculture.

This steady move toward LLCs highlights how modern farm operations are adapting to changing economic conditions while continuing to rely on federal support programs.

Photo Credit: istock-fangxianuo