The recent release of the March 2017 Iowa Land Trends and Values Survey estimated that Iowa farmland values were slightly higher than they were 6 months ago and only 2.7% lower than a year ago. These results provide some encouragement that perhaps land values are starting to stabilize after falling from their peak. This week we decided that it would be a good time to look at farmland value estimates from around the country. Continue reading →
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 →
Cash rent is often the single largest expense item in a crop budget, making its level critical to the profitability of farming operations. During the farm sector’s economic slowdown, rents have been persistently high, greatly contributing to the profit squeeze. It now appears that they are heading lower. For instance, Dr. Craig Dobbins reported that a February poll of Indiana farm managers and rural appraisers found expectations that 2016 cash rents would be down about 8% in 2016.
If realized, a decline of that magnitude would be one of the largest since the 1980s. Given the importance of rents to profitability we decided that it would be useful to examine some historical data on cash rents and examine whether these declines are likely to be sufficient to return farms to profitability.