Rent walkouts point to strains in U.S. farm economy

Greg1959 · Feb 23, 2015

Some grain farmers already see the burden as too big. They are taking an extreme step, one not widely seen since the 1980s: breaching lease contracts, reducing how much land they will sow this spring and risking years-long legal battles with landlords.
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paul · Feb 23, 2015

Shouldn't be a big deal this year. We need one more cog in the wheel to start things falling over. So far we can live on past prices, optimism, and more credit.

Higher interest rates would do it. Push the house of cards over.

Some international deal, embargo or economic collapse or some such trigger.

Paul

rrlund · Feb 23, 2015

I'm not,but if I was in the shoes of some of the guys who've lost land to these greedy pains,who were out to make a fortune,no matter who they walked on,I'd be hoping that the landlords put some of them right out of business.
Keep in mind,I'm not talking about the sensible ones who've ridden the cycles before and knew enough to just keep the land they had and not go crazy. I'm talking about the ones driving the new $80,000 pickups and strutting around like a pet rooster.

NY 986 · Feb 23, 2015

I don't think there will be a correction for a few more years here. There seems to be plenty of "gotta farm" tenants who inexplicably have deep pockets and mercenary landlords who would take out ads 1000 miles away for ground to rent. The worst part is this "show" is taking place on ground that a lot of times struggles to raise 150 bushel corn or 30 bushel soybeans.

Dave H (MI) · Feb 23, 2015

Still waiting for the year end rent check on the fields I rented last year. He knows he is not coming back and I guess he figures pay me last or not at all. Problem with that logic is that I made him sign a contract last year for the first time, I am experienced at collections and my wife works at the courthouse so it is easy for me to file. The other issue he is going to have is that it is highly likely I will rent fields again in the future. When that day comes he will find that HE is the one at the bottom of the list.

BushogPapa · Feb 23, 2015

Here in Central Ohio, with ASUV allotments cut by more than half, Farm ground TAXES are going to shove many out permenently..

They see that farmers are making some money and think that should Stop...

Ron.

Spook · Feb 23, 2015

(quoted from post at 08:18:40 02/23/15)
Here in Central Ohio, with ASUV allotments cut by more than half, Farm ground TAXES are going to shove many out permenently..

They see that farmers are making some money and think that should Stop...

Ron.

Whats a ASUV allotment?

David G · Feb 23, 2015

I think there will be a lot more of this unless landlords re-negotiate contracts. There are still a lot of doctor farmers around here that have deep pockets.

dhermesc · Feb 23, 2015

From another story on the subject:

How many people are walking away from leases they had committed to is not known. In Iowa, the nation's top corn and soybean producer, one real estate expert says that out of the estimated 100,000 farmland leases in the state, 1,000 or more could be breached by this spring.

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Be honest - is 1% really that big of deal? Even if commodity prices hadn't dropped I would expect 1% of all leases to be broken.

Traditional Farmer · Feb 23, 2015

Wonder how many renters paid more than their contracts stated when prices went up?Probably not many.A landowner really needs something like a bond by the renter to back up a long term contract.

paul · Feb 23, 2015

Don't know what that stands for either.

Property taxes in my county in Minnesota have been going up
20-25% a year the past 4 years on farmland.

Add in the new school just voted in for 40-60 million, which is
another $800-1000 a year to me......

And I'm paying more in taxes than rent was in the 80s.....

Paul

NY 986 · Feb 23, 2015

"Experts" especially those who claim to represent the real estate business industry do not carry much credibility with me. For starters how could one guy "know" what is going on across the entire state? Just because one trend is unfolding in his locality does not mean that holds for the entire state or the nation. Generally these guys talk "sunny skies" as they have an industry they need to protect even if it involves a little fibbing. Back when home values were plummeting across the country they were giving the "things are rosey" line to anybody who would listen. In any event I made the same observation as you in that one percent is probably business as usual. I would suspect things are more dire than what he is talking about. I hear a lot of talk that things are not going well for substantial number of farmers who have had their recent sit-down with their banker.

SweetFeet · Feb 23, 2015

For the last four years, our renter paid us "bonus rent".

It's not in our contract - just a gentleman's agreement that if he has a great year, he will pay us more. He's a great guy... hope he farms and rents our land until he's 100.

BushogPapa · Feb 23, 2015

What it amounts to is the amount that Farm ground taxes are less than residential taxes...

That alone raised ours by over 40% for this rear..

We have a "High-Classed" School system here with Astro-Turf on all the Football fields and they want to Astro-Turf their Baseball fields next..!!
4x 800+ student High Schools just in this County now.
Every tax levy adds to the taxes and we have one most every year..

Ron..

RandyB(MI) · Feb 23, 2015

Worst part is that there is a certain segment of our population and Government that would welcome Government controlled/owned land and farmer employees as their warped way of "control" of everything from consumer prices/availability to chemical/environment,GMO/research control to unionized farm workers and the whole ball of socialist BS that comes with it We are already seeing it in other neighboring countries. We are not that far away from the real farmer calling it quits and of course the Government would feel it's obligation to step in (not like THEY had anything to do with the situation) and "employ" anyone wanting to work for them on unionized, tax payer supported farms with all new equipment and the word "profit" being abolished from the dictionary. When the Government , oil companies, insurance companies and banks can't "control" something as essential to survival as food , they hate it and will strive to get that control. Farmers don't get out of farming because they hate to farm all the sudden. In 25 yrs one will not be able to afford to own farm land and all the "Government expence" that will come with it. It's already planned out and has been working for at least the last 40 years or so. When they get the actual "numbers" down to a manageable level the "move" will be easy for them. "Conspiracy Theory"?? I think not. If our "King" had four more years we might see it quicker yet.

BushogPapa · Feb 23, 2015

Already here, Farmers are being forced to pay for improvements to control "Run-off water" that has always just gone to the wet low swampy land that people are building homes on..!!
We always figured a person should have known better than to build in such places..!!
Many small farms are being billed $20,000.oo for the "improvements"..

Ron.

paul · Feb 23, 2015

Back in the 80s I was literally chatting with my young new or over the pasture fence, and said someday the Soviet Union will have more freedoms and better farming than the USA will have, we will cross paths.

Hummmm.

Paul

formenwhogrow · Feb 23, 2015

Kinda hard to feel bad for some of these guys....

JD Seller · Feb 23, 2015

Ohio has aprogram like many states that reduces real estate taxes of farm ground compared to residential and commercial real estate. They do this where twon/cities grow out around farm land. The taxes would be sky high if the ground was taxed at commercial rates.

This is called "Current Agricultural Use Value (CAUV)".

I think this is what he is talking about.

JD Seller · Feb 23, 2015

My sons picked up four farms this spring because of the current renter not being able to pay the high rents. I do not know if any of the land lords are going after the orginal tenant for any rent shortages. In all four cases the rents are a lot lower than the prior rent they where getting. The rent is back to what it was 4-5 years ago om these farms.

As far as landlords sueing the old teneats. Unless the landlord filed a UCC1 on the old tenent the landlord is pretty much out in the cold. They have to go for breach of contract and win. Then get a judgement for the breach of contract damages. Then they are still an unsecured creditor behind the banks. So the odds are that there would be few assests for the landlord to attach/collect.

Greg1959 · Feb 23, 2015

JD Seller- IIRC, you were one of the guys posting on here about how you felt that grain prices were going to fall and you questioned how high rent prices could justify themselves. Much like what happened in the 1980's.

Did you buy your Powerball tickets yet! LOL! Seems like you predicated this one pretty close.

David G · Feb 23, 2015

A bond would be one way, but without it, you are just chasing them into bankruptcy court with the other creditors.

Donald Lehman · Feb 23, 2015

Since the New Zealanders have gotten back up to normal production and China has quit buying milk products (pretty much anyway) from us and some other factors, the price of milk has dropped a lot in the last few months, also. Things are gonna be a lot tighter for the dairy farmer this year compared to the last couple of years for sure.

LonM · Feb 23, 2015

I agree with what you are saying. Just because grain prices are back to where they were before the big run-up a few years ago, does not mean we are heading for another farm crisis. Things are much different now than they were in the 80s in regards to interest rates, farm debt, and lending practices.
Lon

NEKS · Feb 23, 2015

I think RandyB(MI) is right in thinking what is going to happen to agriculture in the near future. There will be new laws every year so in the future when the crops leave the field it will belong to the government. This will happen as each generation of kids are farther removed from the farm.

Rent walkouts point to strains in U.S. farm economy

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