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Lower land rents better than none for landlords

steve-nicholson

An ag economist says cash rental rates are declining throughout the Midwest.

Steve Nicholson with Rabo AgriFinance tells Brownfield continued low crop prices have changed the structure of traditional cash rental agreements as farmers look for ways to reduce costs.  “We’ve seen, and I’m going to reference Iowa, $30-50 dollars per acre and then we’ve seen them come down as much as $75 per acre depending where they are.”

Nicholson recommends farmers use flat rate agreements for short-term contracts and consider flexible rates to lock land in long-term. He says if farmers are in contracts they can’t afford, it’s better for both parties to be open about renegotiating.  “We’ve heard some stories of the farmer just walking away from a contract and on March 1 the landlord is then stuck with the farm and no one to farm it and so then the landlord is then rushing around to find a new tenant or rushing to find someone to custom farm and that’s very expensive.”

Nicholson says cash rents tend to be about 35 percent of a farmer’s crop input costs and it’s one expense that has to come down with declining commodity prices.

Brownfield interviewed Nicholson at the 2016 NAFB Convention in Kansas City, MO.

AUDIO: Interview with Steve Nicholson

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