News

Land rent prices remain high

A financial advisor says there hasn’t been much movement in ag land rental prices.  Mark Greenwood with Compeer Financial says, “We’re seeing a little bit of adjustment, but not a big enough adjustment for clients to be successful and make any money.”

Greenwood says there is still a big gap between what most landlords want and what producers can comfortably pay. “We had land rents probably throughout the midwest that was probably north of 300 dollars per acre, and you have a wide disparity on overall land value.”

Greenwood tells Brownfield taxes are another factor for rental prices.  “Real estate taxes have been an issue in certain issues where we’ve seen a doubling in the real estate tax values, probably not as much in Wisconsin but in Minnesota, it sure has been.”

Greenwood says there might be a limited amount of land available, but he’s always uncomfortable with paying high rent knowing the farm still loses money.  He suggests trying for an open-book relationship with landlords and trying to set a baseline that can be adjusted as commodity prices go up and down.

With only so many acres of land, Greenwood says there always seems to be someone willing to pay a number that in his opinion, would be above the market creating a difficult situation.  He says, “Producers will say ‘If I don’t pay this, I won’t get the land.’ Well, if you’re going to pay that and you’re still ultimately going to lose money, how does that impact your overall balance sheet and is that ultimately the right decision?”  Greenwood says it’s hard for a grain farmer to give up that land when there is also an investment in machinery.  He says not as many farmers are letting the land when they really should.

Greenwood also handles negotiations for renting land on his family’s farm.  He tells Brownfield they have a good open-book relationship, and discuss what the farmer can afford to pay.  He says if a landlord sticks to the high prices, eventually, economics will play out and prices will come down unless commodity prices climb again.