Wisconsin Farmland Rents Remained in Check During 2009
Wisconsin Ag Connection - Wisconsin cropland rents rose in 2009, but not as dramatically as in 2008. That's according to the 'Status of Wisconsin Agriculture' summary released last week by economists with the University of Wisconsin-Madison.
UW Economist Ed Jesse says average rents increased about five-percent statewide from $85 per acre in 2008 to $89 per acre in 2009. Wisconsin's increase in cropland rents was larger than Michigan's but less than those in Illinois, Iowa and Minnesota.
"It is not surprising that cropland rents have been on the rise," Jesse said. "Since corn, soybean, and wheat prices have nearly doubled in recent years, growing these crops on rented land has become more profitable."
Between 2006 and 2009, cash rents in Wisconsin rose about 25 percent. During the same period they rose even more in each of the surrounding states--mostly because of the big gains in crop prices.
For the year ahead, Jesse doesn't expect rents to keep increasing at this pace.
"Crop prices will hold constant at best and could decrease slightly," he noted. "Lower crop prices would discourage farmers from competing for cropland. While rents are up dramatically, renting land appears to be a less expensive strategy than purchasing land and paying interest on a mortgage."
The report further stated that cash rents for Wisconsin cropland generally have not risen as much as interest payments on fully financed land purchases at prevailing interest rates. The ratio of cash rents to mortgage interest expense fell from around 0.6 in the late 1990s to 0.40 or lower in recent years, meaning that it has become relatively less expensive to rent land rather than buy it.
http://www.wisconsinagconnection.com/story-state.php?Id=103&yr=2010
UW Economist Ed Jesse says average rents increased about five-percent statewide from $85 per acre in 2008 to $89 per acre in 2009. Wisconsin's increase in cropland rents was larger than Michigan's but less than those in Illinois, Iowa and Minnesota.
"It is not surprising that cropland rents have been on the rise," Jesse said. "Since corn, soybean, and wheat prices have nearly doubled in recent years, growing these crops on rented land has become more profitable."
Between 2006 and 2009, cash rents in Wisconsin rose about 25 percent. During the same period they rose even more in each of the surrounding states--mostly because of the big gains in crop prices.
For the year ahead, Jesse doesn't expect rents to keep increasing at this pace.
"Crop prices will hold constant at best and could decrease slightly," he noted. "Lower crop prices would discourage farmers from competing for cropland. While rents are up dramatically, renting land appears to be a less expensive strategy than purchasing land and paying interest on a mortgage."
The report further stated that cash rents for Wisconsin cropland generally have not risen as much as interest payments on fully financed land purchases at prevailing interest rates. The ratio of cash rents to mortgage interest expense fell from around 0.6 in the late 1990s to 0.40 or lower in recent years, meaning that it has become relatively less expensive to rent land rather than buy it.
http://www.wisconsinagconnection.com/story-state.php?Id=103&yr=2010
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