Posted by JD Seller on November 08, 2014 at 22:06:28 from (208.126.198.123):
In Reply to: OT: farm land rent posted by Kirk Affeldt on November 08, 2014 at 19:04:06:
Kirk I get a good laugh out of these type of posts.
Grain prices are a good 40-50% lower than they have been the last few years. YOUR now questioning whether your cash rent is high enough for next year????? That is kind of a year late and a dollar short.
Also land rents are very dependent on the production capacity of the land. That varies widely from one area to another. It can be much different from one side of a farm to the other.
There is very little ground in SE Minn. that will bring the top dollar. The production potential is just not there.
The $500 ground will product 200 BPA or more of corn pretty much every year. It will at least average that over several years.
Also you have a tenant that seems to be doing a good LONG term job on your land. IF he was just interested in the profit for a year or two there would not be any hay or oats grown on your ground. Both of those crops are good for the soil and make great rotational crops but both are money losers compared to corn/soybeans the last few years.
IF I was your tenant I would be reluctant to pay higher rent if you came to me when grain prices are dropping.
You MIGHT have gotten more money from a BTO but he sure would not be fooling with hay and oats or any other rotation on the ground. To even see day light on a high rent it would be continuous corn.
Remember your are getting paid from your current tenant. I know of several landlords that are NOT getting the balance of the rent from a few BTO around here. The crop prices are just wiping out cash flows.
There is some land right close to me that we farmed for YEARS. Four years ago the owner wanted to almost double the rent. He rented to the BTO that promised the high rent. The first thing the landlord found out is that that high rent is just paid on the planted acres. His farm was all of a sudden 5% smaller. Then there was little fertilizer applied the last year of his rental agreement. So he really did not get that much more rent.
My sons offered him a little less then we had been paying. It will take several years to get the soil build back up.
Remember all the things your current tenant does. Are your ditches and road right of way all kept mowed by your current tenant???
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