17 Feb 2012 - Thank You for Your Comments

On Samuelson Sez a week ago I asked the question “How High is too High?”, referring to prices paid for farmland and cash-rent prices. I focused on a cash-rent auction in Iowa earlier this month that saw prices as high as $578 an acre. I asked for your comments and you responded. Let me share just a sampling.

“In Lancaster County, PA a farmer who had rented a nearly 100-acre tract for some 30 years was displaced by a neighboring farmer for $567 per acre. I am told however, to any landlord, actually being paid a rental amount is financially better than a bid for the sky that does not get paid. My thought on Karl’s comments.”

From Indiana, “Here in northern Indiana non-tillable is going for $140-$150 per acre; irrigated land is going for about $200. Aren’t these over the top prices being paid setting up a farming bubble that will pop, not unlike the housing market that we are still working through?”

This comment from Illinois, “Rents always go up easier than they come down. A lot depends on the philosophy of the landowner and the tenant. I have always wanted to care for the rented land as if it were my own or were to farm it for a long period of time. That means keeping the fertility up to maximize yields over time, keeping drainage tile repaired and maybe improved, fence lines cleaned and road ditches mowed. The challenge then is to find a land owner that shares the same philosophy and is satisfied with a competitive cash-rent but maybe not the highest rent someone might pay if they were to skimp on fertilizer and lime to maximize short term returns. The other risk of being the high bidder for new acreage is increasing the expectations of the current landlords.”

Finally from Georgia, signed The Sheriff. . . “You cannot be serious. Land rent in South Georgia is only $35 to $55 per acre and land rent in Iowa is $500+???!”

More than half of your comments expressed concern about the long time tenant family farmer who suddenly has his world turned upside down when the landlord, without warning, says “You lost the land to a higher bidder”. And young farmers expressed their frustration at being priced out of the land they needed to expand their start-up operation. But then there was the landlord who said “Orion, I’m not the bad guy here. I put my land up for rent and you bet, I’m going to take the highest offer; every other landlord would, too.”

Well, thank you for sharing your thoughts and comments on this week’s Samuelson Sez.