Record Demand for Land Seen

Record Demand for Land Seen - Area Updates

Western Area

David Englund, AFM, Area Vice President, in Hastings, Nebraska, supervises farm managers who manage land in South Dakota, Wyoming, Colorado, and Nebraska.

When discussing cash rents for top-quality ground, Englund reports: "Due to the large area that we cover, our cash rents are quite variable. Rents were up anywhere from 25% to 50% for 2008 over the 2007 rents. On the best quality farm ground, we are in the $250 to $350 per acre range depending on who furnishes the irrigation equipment." He goes on to say, "If grain prices stay in the current range, I estimate that we could see another increase of approximately 25% for 2009 rents." Englund predicts that rental rate negotiations may be difficult for 2009 due to projected large increases in fertilizer, fuel, seed, and other input costs and the assistance of a professional farm manager who is familiar with the area is even more critical.

For additional information, please contact David Englund at (402) 462-6248 or email denglund@farmersnational.com.

South-Central Area

Paul Joerger, AFM, Area Vice President, Overland Park, Kansas, who supervises farm managers managing farms in Kansas, Colorado, Missouri, and the Mid South reports that top cash rents for quality ground in his area are as follows:

Dryland land in central and western Kansas rented for $65 per acre and pasture land rented at $20/acre. Pivot irrigated land in eastern Kansas rented for $200 per acre. Eastern Kansas and western Missouri dryland cash rented for $135 per acre with the pasture renting for $25 per acre.

Joerger feels cash rent increases for 2009 will be approximately 20% for pasture land and cropland will see increases of 20% to 30%. Another factor that will help increase leases is that wheat yields are anticipated to be above average in 2008.

In the Delta area dryland cash rents are expected to increase 15%, irrigated cash rents are expected to be up 20%, and increases in pasture rents are expected to be 5% to 10% higher.

For additional information on conditions in this area, please contact Paul Joerger at (913) 549-4241 or email pjoerger@farmersnational.com.

North-Central Area

Larry Hill, AFM, Area Vice President, of Eagle Grove, Iowa, supervises farm managers who manage farms in Missouri, Iowa, and Minnesota.

When discussing negotiating cash rents, Hill says, "So much depends on if you are negotiating with your current tenant or if you are exposing the farm to the market. When the farm is exposed to all farm operators in an area, we are seeing rents on the top farms ranging from $325 to $400 per acre. This is because farmers see this as an opportunity to add to their current acre base and are willing to bid on the very top end of the cash rent market. They can subsidize this rent with another farm that may be at or below the market. When you are negotiating with a current tenant, it is much more difficult to raise the rent this dramatically." Hill is seeing rents ranging from $225 to $350 per acre in the good producing areas of Iowa and southern Minnesota with the rents in southern Iowa ranging from $145 to $250 per acre, depending on quality. In western Minnesota and eastern South Dakota, rents range from $125 per acre to $225. The Red River Valley rents are from $100 to $150 per acre.

For 2009 leases, Hill says: "Most of the rental increases will come in the form of higher grain prices for 2009 for farms where our clients participate in a share of the crop. If grain prices remain strong and farm operators have an opportunity to lock in input expenses early, we will see continued strong demand for farmland. I would expect cash rent increase of 25 to 35% for 2009."

According to Hill, other factors affecting leasing for next year is the fact that most farmers are apprehensive about the balance of 2008 and 2009. He feels there will be a great disparity about how farmers do this year. Even though grain prices have been terrific this year, some farmers struggled to get crops planted this spring and some are facing drowned out areas and some are facing devastating floods. On the other hand, some farmers will have good yields and the good prices will be beneficial. Since some farmers will have their best year ever and some will have have a year filled with challenges, it is difficult to determine exactly what lease terms will do. The higher fuel and input costs will definitely be a factor when negotiating leases for 2009. Variable leases may be an option to lessen the risk farmers will face for 2009.

For additional information regarding conditions in this area, please contact Larry Hill at (515) 448-9090 or email lhill@farmersnational.com.

Eastern Area

Dennis Hoyt, AFM, Area Vice President, supervises the farm managers who manage farms in Illinois, Indiana, and Ohio.

According to Hoyt, "Cash rents that were negotiated early in the year were in the $225 to $250 range for 2008. If leases were negotiated later in the year, they were up to $375 per acre, especially when offered in a competitive environment."

When asked about lease terms for 2009, Hoyt reports that it is too early to predict as the area has been hit with a variety of production issues this year, including flooding, late planting, no planting, and tremendous erosion problems. Mr. Hoyt feels that all of these issues will affect the competition for leases, which is what drives the increase in lease terms. Hoyt went on to say, "Input prices and grain prices will have an equally major effect. I believe we will have good areas that terms may increase another 25%-30% and other areas where there may be no increases. I see a continued shift from cash rent to some type of share arrangement in many areas." Another factor that Hoyt felt could affect lease negotiations for 2009 is how the Farm Bill plays out and if it will allow an acceptable method of having variable cash rent leases.

For additional information, please contact Dennis Hoyt at (217) 223-8035 or email dhoyt@farmersnational.com.

The American Society of Farm Managers and Rural Appraisers awards the title of Accredited Farm Manager (AFM) to those members who have had years of experience, are technically trained, have passed rigid examinations, and subscribe to a high code of ethics.