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Bankers say rental rates need to come down

soybeans 6-11With profitability in grain farming doing an about face, farmers who are renting land are facing a tough situation.

Andy Bentley, an agricultural banker from West Des Moines, Iowa, says farmers are going to have a tough time making their operations cash flow with three dollar corn and nine dollar soybeans.

“When it costs them four bucks to put the corn in and 10 or 11 bucks to put the beans in, it’s going to be a little tough,” Bentley says.

Ag Banker Mike Hein of Durant, Iowa says current corn ground rental rates in his area are in the 300 to 350 dollar range.

“I think the figure that we probably need to get to is going to be sub-300,” Hein says, “and depending on the productivity of the ground that you’re working with and the yields that you are used to seeing, we might have to bet back more to the mid-200 levels than the mid-300 levels.”

But Hein says there’s been some reluctance on the part of landowners and tenants to even discuss rate adjustments.

“There seems to be a little hesitancy on both the landlord to be willing to back off on what they’re requiring for cash rents and the tenant (who is) a little concerned about losing that land base by approaching the landlord and asking for some reduction in their land cost.”

Bentley and Hein participated in this week’s ag banker’s conference in Omaha.

Joe Cornely contributed to this story.

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