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Cash rent outlook challenging

An Ohio State University agricultural economist says competing economic fundamentals make it difficult to forecast cash rental rates in 2016.

Barry Ward in the Department of Agricultural, Environmental and Development Economics (AEDE) says while strong equity positions and higher property taxes lend support to cash rental rates, the forecast for low profit margins suggests cash rents should be lower. Those competing factors, Ward says, make for some challenging negotiations.

“Do they step away from these higher rents, most of them aren’t willing to do that yet because number one they still have decent equity, and number two, there’s still a lot of competition in their neighborhood that’s willing to pay even rents that may be above what they should be paying,” Ward said.

Ward says cropland values in Ohio may go down in 2016 because of lower profit margins.

Audio: Barry Ward, Leader, Production Business Management, Ohio State University