Land

NY 986 · Feb 16, 2010

Anybody else seeing a big spike in land rental price and sales price this year? We are seeing rents exceeding 100 dollars an acre on some very marginal ground. The kind of ground that honestly averages 125 bu corn an acre or 35 bushel beans an acre. With commodity prices likely to be down quite a bit from where they were last year I would say there is no way to make a profit regardless of FSA payment.
Getting to the point where unless you are independently wealthy you are not going to do much in this business anymore. I don't think the guys paying big money on purchases are thinking where they are driving tax assessments to. Today's power grab is going to lead to tomorrow's headache. Makes you wonder if a guy should get out today while land prices (for my area) are sky high as I don't think these values will hold.
I saw the thread below about bankruptcy below but am talking a different phenomena here (big out of state money). I hope some New York and Pennsylvania guys respond to me.

Anonymous-0 · Feb 16, 2010

I have a small farm in CNY that I mostly rent out to a neighbor. I have rent set at $45/a and has been for quite a few years. It is getting to the point I will be forced to raise it because it is barely covering the taxes and insurance now. There has been some crazy prices offered to other farmers in the area (but not me) for the land in this area. It has cooled off a bit in the last year or so though. NY property taxes are killing farmers.

cjd12000 · Feb 16, 2010

I live down towards candor and rent isnt to bad for hill ground and about 4x higher for flat land. I cant afford to buy any land so I rent land to feed my dairy herd. everbody down here is thinking they are going to get rich of gas rights and if anything is for sale they are asking 10000 plus and acre and retaining mineral rights. It sucks

paul · Feb 16, 2010

Don't remember back when land was renting for $100.

Midwest been going through this for some time now. Hear of $350 in some circles.

--->Paul

Anonymous-0 · Feb 16, 2010

Send some to southern IN. 125bu.corn& 35bu.bean ground around here brings $175 to $200 per acre. Last two large parcels of farm ground on auction brought 5300.00 & 6100.00 per acre. Hell recreation property brings $4000.00 plus per acre.

CH(upstate,NY) · Feb 16, 2010

Onondaga Co. just passed a ban on hydro-frack drilling. Guess the Marcellus shale field is off limits. Quite a few wells are already in but the people thinking they were going to get rich are thinking otherwise.

JDemaris · Feb 16, 2010

A friend of mine just sold off 200 acres of his best, but hill-top ag land. That's here in Otsego County, NY. He got $2800 an acre for it. 15 years ago, he had offered it to me for $800 an acre and I passed on it. Seems maybe I should of bought it.

There are still good land buys though. I just bought 32 acres of heavily wooded land - all white ash, red oak, beech and hard maple. Paid $18,000 which is quite a bargain considering usual market prices.

In regard to renting farm land? Much is free for the using around here. Many are willing to let someone farm it just to keep the ag. tax exemption on it. That because of so many dairy farms that have gone under.

1206SWMO · Feb 16, 2010

In west central MO and east central Kansas you can rent 120-130 bu corn ground and 30-35 bu bean ground for as little as $60-70 per acre.Wheat is getting real hard to raise in this area.2009 was a great year and the corn made 150-180 and the beans 40-60. Good farm land sells for $1600-2000 per acre.

Jeff-oh · Feb 16, 2010

Blame the Casino's. Before Beltera, Argosy, Grand Victoria and the like prices were not that bad. Now every land speculator and business has driven prices and taxes through the roof.

fixerupper · Feb 16, 2010

Just ran your figures through my spreadsheet. I farm in Iowa so I'm probably comparing apples to oranges but here goes.

At $100/A rent the farmer needs 131.5 bu/a to break even at $3.35 cash corn, the current local price here in NW Iowa.

If it yields 125 and the rent is $100/a he is losing $22/a at $3.35 cash corn.

This includes all costs involved in raising and marketing the crop in northwest IOWA, excluding insurance premiums. I don't have a clue what the input costs are for a New York corn crop but it's kinda fun to run the figures nonetheless. Jim

Zach Bouchard · Feb 16, 2010

Everyone is trying to bring a little more money and land owners are doing the same. Gotta make a little more to pay for the nnalert.

NY 986 · Feb 16, 2010

Seed and chemical should be close to same as you. We get hurt on bulk inputs like fuel and fertilizer. I would say on average we pay a quarter more on a gallon of fuel and 15 to 20 percent more for fertilizer. There are exceptions every now and then.
You are re-enforcing my thought that there are other reasons on this increase outside of normal investment-return motives. A lot of this hinges on long term control as far as rent goes. If your cash on hand allows you pay a premium on rent to get control. If you are lucky you get your competitors to run up the white flag (surrender) when long term control is placed on the table (purchase).

Dave from MN · Feb 16, 2010

When I bought my land and the farm, previous owner was getting $25 an acre for rent, and I bought the tillable for $1680/acre. That was '04. I raised rent to $45 an acre and the farmer compained I was gonna puyt him in the red(ya right). Fast forward to 2009, I just paid $6000 an acre for an adjacent feild to what I paid $1680 in '04. High low here now is $2300/$8500 an acre for similar types. I farm my own land and rent some, cheapest is $25/acre, highest is $45 an acres. I have a larger peice that I am hoping to secure but.... I am gonna have to make an offer of at least $70 an acre to get the land from current guy. This is dry land, marginal soil, BUT is adjacent to my property, and I have plenty of poop to reduce fertlizer costs. Alot of land here is hitting the $75-$100 FOR DRY LAND, AND GOOD LARGE IRRIGATED SEEMS TO BE CREEPING UP TO THE $300 MARK,

paul · Feb 16, 2010

Real estate taxes are gonna go through the roof here in MN. Gonna be a much bigger cost. And taxes never go back down in this state....

--->Paul

Anonymous-0 · Feb 16, 2010

The chances of drilling the Marcellus in Onodaga Co are slim to none at best. The formation is too shallow and too thin that far north.

Secret Squirrel · Feb 16, 2010

In Western Ky good stuff rents for 200.00 cash up front and better. One farm here just rented for 252.00, a neighbor turned down 325.00. Selling now for 4000.00 to 6000.00. All this with no serious developer or other influence. Some have coal money to spend. Beginning farmers have no chance here.

Bob Bancroft · Feb 16, 2010

Here in the biggest grain producing county in the state- Cayuga- the mega milk factories are driving up land prices. $5000-$6000 an acre.
For a long time prices here lagged the rest of the country. Now I would say we've gone the other way. It's now impossible for a small to medium producer to expand.

NY 986 · Feb 16, 2010

I would say the reason we lagged for so long is it is hard in a lot of areas to find large blocks of highly productive ground. A lot of ground around here may average 125 bu corn per acre but that is with a small block of a farm running 200 bu per acre with rest down near 100. Get a wet cool growing season and you will be hard pressed to average 100 bu on a lot of farms here.

Kevin Schmidt · Feb 16, 2010

It all depends how you look at it. 125bu corn and $100 rent sounds like a deal to me. Here rent is 250-300 and average corn yeild is 175 or so, but we did average just over 200 this last year.

Sell the corn for 4.00 out of field. Beans at 9.75. It works

I have a lot of my 2010 crop sold at those numbers. Marketing can make or break you as much as a drought or wet year

JK-NY · Feb 16, 2010

That ban is only on county-owned property.

davemk · Feb 16, 2010

Land prices will keep going up until long term interest rates start rising.

Dave

NY 986 · Feb 16, 2010

Financial stability of commodity brokers has long been an issue here in NY. I would love to know the feeling of being able to sleep at night knowing that the contract you made two seasons ahead is rock solid.

JMS/.MN · Feb 16, 2010

But....your prices are skewed by the fact that St. Cloud, a metro of about 60,000 people, is just a few miles away. Outstate MN has different numbers, albeit very high compared to 10 years ago.

NY 986 · Feb 17, 2010

Forgot to mention that a lot of this has happened in the last few weeks. The prices you mentioned were probably from sometime ago. The large progressive operators are not the ones throwing these bids around locally. On the outside it would appear some small newcomers are trying to make a grab.
Thank you for your comments.

Kevin Schmidt · Feb 17, 2010

Those prices I quoted were from 6-7 weeks ago. You could have gotten those prices in November as well.

Perhaps the newcomers are trying to get established and maybe have income from other sources to cover living?

Also here, selling a year out to an established local coop doesn't have much risk

Really crafty marketing would sell the crop at 'x' dollars, then buy back some put or call options on the board and try to 'insure' a better return. I have done that, but not often

NY 986 · Feb 17, 2010

I worry about the long term effect of this. I don't think the commodity prices we have seen in the past year and half will sustain going into the future. Forward contracting will help put off the issue longer than marketing after the crop has come in. Taxes are bad enough here without the assessor thinking he needs to double or triple some values based on some recent sales. A lot of guys need revenue bad enough from their farming operations that they can't afford to get in a tiff with landlords. A landlord has a right to charge whatever they feel but most farmers have to make an offer based on what the market tells them their net revenue per acre is. It's not unheard off for a landlord to take his ground off the rental market if he thinks he is not getting enough. Especially if he has the money to cover taxes from another source. I don't have the financial position to keep competitors away by bidding things up beyond what rent will reasonably cashflow for.

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