If one farmer rents and another owns with a mortgage, which will likely show a higher profit?

The owner is likely to show a higher profit due to several factors associated with ownership, particularly when a mortgage is involved. When a farmer owns the land, they typically benefit from long-term equity growth and potential appreciation in land value. Ownership provides the opportunity to capitalize on the asset over time, as mortgage payments contribute to building equity rather than being an outright expense.

Moreover, owning land allows the farmer to control various inputs and production practices without the restrictions that might come with renting. While rental expenses are fixed and potentially high, owning with a mortgage means that the farmer can stabilize costs and benefit from the appreciation of land value while using their equity to secure loans or invest in improvements that could yield higher returns.

In contrast, a renter does not build any equity and their profits are often significantly impacted by the costs of rental payments, which are considered operating expenses with no long-term gain. Therefore, ownership tends to provide more opportunity for profit through asset accumulation and capital appreciation, leading to a higher profit margin compared to renting.