Farmland getting more expensive to rent
(FDLReporter.com) - Wisconsin farmers saw an average increase of $7 per acre in cropland rental rates last year, bringing the average price to rent to $99 per acre.
Pasture rental rates averaged $32 per acre, well above the national average of $11.50 per acre, according to a recent government report.
For Wisconsin farmers like John Jacobs, those land rental rates are key factors — along with fertilizer, seed, fuel and other costs — in maintaining their businesses.
“Input costs are so high that if you rent unproductive land or land that needs some drainage, you run such a big risk of not getting a crop it can kill you,” said Jacobs, who is involved in dairy and crop operations near Pulaski, with land in four counties. “We’re cautious about it. We like to rent better land.”
The increase in rental rates mirrors an increase in the value of agricultural land and buildings in the state.
The value of farm real estate in Wisconsin — including land and buildings — rose 8 percent over the past year to an average of $4,050 per acre, outpacing the national average.
Nationwide, farm real estate values were up 7 percent on Jan. 1 to $2,350 per acre, according to an annual report from the Wisconsin field office of the National Agricultural Statistics Service.
In Wisconsin, cropland values were up $300 to $3,950 per acre, according to the report, and pastureland showed a $40 increase to $2,090 per acre.
“Right now, with markets being where they are and commodity values where they are, people are seeing agriculture as one of the steady markets out there,” said Kevin Jarek, crop and soils agent with Outagamie County University of Wisconsin-Extension Service.
Cash rent rates were $94 per acre in 2010 for Brown County, the highest in the east central portion of the state. Southern portions of the state had the highest rates in 2010, including $164 per acre in Lafayette County — the highest rate in the state for that year.
The next set of county estimates is expected to be released next month.
“The fact that everyone has to eat and commodity prices are strong, it’s not surprising to me that the land rental rate is up $7 per acre from last year,” Jarek said.
Prices within a county also depend on where the farm is located.
“The highest rents we’re going to see is where there is the highest concentration of cattle, which is the southeast corner,” Jarek said. “Land rental rates aren’t determined by a single formula but are basically determined by demand in the immediate area. Whenever we have competing cattle enterprises we have demand in the immediate area. All it takes is two people to get the land rental rate going in a direction above some of the averages in that report.”
Land fills two key roles for livestock producers, it provides a food source for the herd and it gives farmers area to spread manure — a key element in nutrient management plans.
Jarek said rents in Outagamie County can run from $50 a acre to more than $100 per acre.
“I can go anywhere in this county and find someone who is paying three digits for land rent,” he said. “There is nowhere that is immune.”
Jacobs said $99 seems to be a good average rental rate, but much of the pricing — which can be lower or higher than the average — depends on the quality and productivity of the land.
The wild card in farm economics are the farm markets themselves, which can go through drastic swings in a matter of months.
“Where we use to think in terms of dimes, we now think in dollars on grain prices,” Jacobs said. “So there’s a lot of uncertainty… But I think land values are stable. I don’t see them screaming up, but I don’t see them crashing either.”
Corn for September delivery was trading around $7.02 per bushel Thursday afternoon. A year ago it was $3.95 per bushel.
Jarek, who said he’s had farmers let land go when it got too expensive, said another hike in prices like this year in 2012 may lead to some hard decisions on the farm.
“Even though grain prices are high right now, people have to remember input costs are high,” he said. “If land rental rates do increase another $7 next year, we’ll see some more people have to seriously consider if they can afford to keep that land in their operation.”
http://www.fdlreporter.com/article/20110815/FON0101/110814020/Farmland-getting-more-expensive-rent
Pasture rental rates averaged $32 per acre, well above the national average of $11.50 per acre, according to a recent government report.
For Wisconsin farmers like John Jacobs, those land rental rates are key factors — along with fertilizer, seed, fuel and other costs — in maintaining their businesses.
“Input costs are so high that if you rent unproductive land or land that needs some drainage, you run such a big risk of not getting a crop it can kill you,” said Jacobs, who is involved in dairy and crop operations near Pulaski, with land in four counties. “We’re cautious about it. We like to rent better land.”
The increase in rental rates mirrors an increase in the value of agricultural land and buildings in the state.
The value of farm real estate in Wisconsin — including land and buildings — rose 8 percent over the past year to an average of $4,050 per acre, outpacing the national average.
Nationwide, farm real estate values were up 7 percent on Jan. 1 to $2,350 per acre, according to an annual report from the Wisconsin field office of the National Agricultural Statistics Service.
In Wisconsin, cropland values were up $300 to $3,950 per acre, according to the report, and pastureland showed a $40 increase to $2,090 per acre.
“Right now, with markets being where they are and commodity values where they are, people are seeing agriculture as one of the steady markets out there,” said Kevin Jarek, crop and soils agent with Outagamie County University of Wisconsin-Extension Service.
Cash rent rates were $94 per acre in 2010 for Brown County, the highest in the east central portion of the state. Southern portions of the state had the highest rates in 2010, including $164 per acre in Lafayette County — the highest rate in the state for that year.
The next set of county estimates is expected to be released next month.
“The fact that everyone has to eat and commodity prices are strong, it’s not surprising to me that the land rental rate is up $7 per acre from last year,” Jarek said.
Prices within a county also depend on where the farm is located.
“The highest rents we’re going to see is where there is the highest concentration of cattle, which is the southeast corner,” Jarek said. “Land rental rates aren’t determined by a single formula but are basically determined by demand in the immediate area. Whenever we have competing cattle enterprises we have demand in the immediate area. All it takes is two people to get the land rental rate going in a direction above some of the averages in that report.”
Land fills two key roles for livestock producers, it provides a food source for the herd and it gives farmers area to spread manure — a key element in nutrient management plans.
Jarek said rents in Outagamie County can run from $50 a acre to more than $100 per acre.
“I can go anywhere in this county and find someone who is paying three digits for land rent,” he said. “There is nowhere that is immune.”
Jacobs said $99 seems to be a good average rental rate, but much of the pricing — which can be lower or higher than the average — depends on the quality and productivity of the land.
The wild card in farm economics are the farm markets themselves, which can go through drastic swings in a matter of months.
“Where we use to think in terms of dimes, we now think in dollars on grain prices,” Jacobs said. “So there’s a lot of uncertainty… But I think land values are stable. I don’t see them screaming up, but I don’t see them crashing either.”
Corn for September delivery was trading around $7.02 per bushel Thursday afternoon. A year ago it was $3.95 per bushel.
Jarek, who said he’s had farmers let land go when it got too expensive, said another hike in prices like this year in 2012 may lead to some hard decisions on the farm.
“Even though grain prices are high right now, people have to remember input costs are high,” he said. “If land rental rates do increase another $7 next year, we’ll see some more people have to seriously consider if they can afford to keep that land in their operation.”
http://www.fdlreporter.com/article/20110815/FON0101/110814020/Farmland-getting-more-expensive-rent
Posted by Colvin & Co. at 8/15/2011 5:21 AM 
Categories: Farmland
Tags: Wisconsin agriculture commodities farmland farming
Categories: Farmland
Tags: Wisconsin agriculture commodities farmland farming
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