Cash Rent Adjustment Continues

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by Brent Gloy

Now that harvest is rapidly winding its way way to completion, many farm tenants and landowners will quickly turn their attention to cash rental rates for 2017.  Cash rental rate decisions and discussions can often be challenging, especially in times of rapid commodity price changes. It is no surprise that cash rent and farmland values probably account for largest number of questions that we receive from readers and seminar participants.  Continue reading

Farmland Values and Cash Rents: Declining Profits Point to Further Reductions

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by Brent Gloy

As we discussed in these May posts (1, 2) most indications are that prices for U.S. row crop farmland are now softening, bringing an end to a tremendous run of increases for farmland values. We thought it would be useful to take a look at how far farmland values have come and some different measures of farmland valuation in order to gain  insights into where prices might be headed. Continue reading

The Next Threat to Farmland Values

By

Brent A. Gloy

With commodity prices tumbling one of the key supports for sky high farmland values is changing rapidly. As economic returns in the farm sector fall, we should expect that the other key driver of high farmland prices, low interest rates, will come into much greater focus. Even with elevated profitability of recent years, capitalization rates on farmland have steadily drifted lower, meaning that the ratio of current income to farmland prices has fallen. In other words, farmland prices have grown more rapidly than current income. While this has made sense in a growing income and falling interest rate environment, this trend may be approaching its limit.   Continue reading