Strong commodity prices and high land values are creating a hot rental market for farmland. Farmers National Company reports that across the Corn Belt, cash rents are up for 2012, and some rents are reaching stratospheric levels. According to Jerry Warner, chief management officer for Farmers National, the market is – driven by profitability. Over the past three years, higher commodity prices are factoring into a farmer’s desire to control more land, and therefore they are very aggressive bidders when given the opportunity.
Warner says – “I’m aware of cash rents of 600-dollars in Iowa. I don’t know if that is the highest. There does seem to be a lot of rents between $400 and $500. Warner says the highest rents occur when farmers compete head-to-head for land. We’re seeing 25 to 45 percent increases compared to 2011.”
At the same time, landowners are taking a new look at crop share. Gary Schnitkey at the University of Illinois says – “in the last 20 years, there’s been a slow switch from crop share to cash rent. That has stopped because crop-share leasing hasn’t been bad for the landlord recently. And if anything, we see cash rent moving to flexible rent. Most professionally managed land is on a flexible lease with minimum cash rent plus a bonus.”
NAFB News Service