News
More cash rent pressure expected
2016 cash rent agreements for Midwest farmland are about five to 10 percent lower than 2015. And some ag economists predict an even bigger drop next year.
Iowa State University Extension farm management specialist Kelvin Leibold says low commodity prices will be the main factor in 2017 cash rent discussions. But he says additional pressure will come from an expected decrease in Agricultural Risk Coverage (ARC) payments in 2017.
“Those payments really ended up getting transferred to the landlords in the form of higher rents,” Leibold says. “So as those government payments disappear, that will put additional pressure on the revenue side and on the rental rate side.”
Liebold says landlords are asking about other input costs.
“Landlords continue to express concern about the fact that we talk about lowering rents and they’re saying, ‘Well, when is the inputs industry going to participate in some of these lower costs or lower prices?’”
Liebold says while some ag inputs, such as fertilizer, have come down, seed prices have not.
ISU Extension is currently holding a series of farmland leasing meetings across the state. The meetings are designed to assist landowners, farm tenants and other agri-business professionals with current issues related to farmland ownership, management and leasing arrangements. A list of the meetings can be found on ISU Extension Ag Decision Maker web site.
AUDIO: Kelvin Leibold
Arc payments will increase with lower grain prices n provide operators with extra cash flw, December corn futures 2006-2015 avg $4.50, CRP rates $300 or more, Dec 2017 corn futures $4.09-$3.83, Dec corn futures 2018 $4.11-$3.88. Land sales $10500 plus. Inputs for seed, fertilizer, herbicides lower, interest costs at record lows, yet bankers continue to push for lower costs to improve profits, many operators in good financial conditions, property taxes continue to increase.