(800) 853-2651
SHOP NOW

Land rent

I

IaGary

Well-known Member
Someone posted after me when I mention guys paying $450 cash rent. Wondering if they are nuts. Here are the figures we work with here in eastern Iowa on a per acre basis.

Seed $100

Fert $250

Herb $50

Machinery $125

Fuel $25

Rent $450

Total $1000

At the time most guys were agreeing to these leases corn was $6.00 a bushel and this land will yield 200 bushel per acre. So that would equate to $1200 per acre income or $200 an acre income.

I don't pay $450 an acre rent and won't unless corn hits $7.00 a bushel and my landlords demand it.

But that's how these guys are figuring it in eastern Iowa and places beyond.

Gary
 
The answer of course is VOLUME lol

Seriously Ive ran the same numbers and agree and have no idea how they can do it unless its a big corporate write off scheme and there are some sort of accounting and/or tax tricks that make it profitable???

If you cant make money (per acrer) at those prices you need to get a bigger truck and farm more acres lol

John T No longer a farmer, I got out years ago buttttttttt I made good money by buying and dividing and selling the land woo hoooooo
 
Is that fert going to supply next year's beans, if so you should cut down the fert cost a bit. I seem to average about $130-150 an acre if I take the whole fert bill divided by all my acres - need to sort out the N for corn only, and divide up the P&K for a 2 year cycle for my way to be accurate. But then I'm going for 170 bu goals here, you need a little more than me for 200bu....

Just got a flier in the mail, fella looking for land to rent, $190-350 an acre depending on drainage, a nice glossy cardstock flier, mass-mailed......

--->Paul
 
Paul I fertilize all acres every year with P and K. Bean acres got around $70 worth of P and K. Corn got around $115. My Nitrogen for corn was about $130 an acre.

Those figures above are for corn not beans.

My bean costs are

Seed $55

Fert $70

Herb $40 I will have to make 3 trips this year. The pre emerge didn't work.

Mach. $100

Fuel $20

Total $285 plus rent.
 
Yep John if those big guys can make a profit of $10 an acre they will take on more.

I'm at the point if I add acres I need a full time employee. With a full time employee I would have to double my acres for him to make a living as well as myself.

The cycle never ends for the big guys. They get to a point to where they add another combine then need another guy to run it then need more acres then need another combine, on and on and on.

Gary
 
Yup, I am seeing the same thing here in Eastern Iowa. It is going to be a REAL tough year on them if we do not get any rain. I just got back from Texas and think we are drier than they are.
 
Highest cash rent I have heard around east central Indiana is $250 in very productive bottom ground. I rent my not so productive 9 acres at $100. Average in the area is more like $150 to $200.
 
Gary, everything you said applies to my neck of the woods in NWIA too. Our commodity prices at the current time have pretty well caught up with yours in eastern Iowa because of the ethanol plants and feed mills. I don't think any corn leaves this part of the state in the form of grain. We're +.30 basis right now. Jim
 
I'm a businessman (insurance) not a farmer so bear with me if I am not seeing the whole picture here. But this discussion is very interesting to me because I feel like I have never totally understood the economics of farming.

Can a farmer insure the crop adequately to guarantee the income? If so a $200 an acre profit on $1,000 invested is an outstanding return. Way better than you'll get by investing the same $1,000 at the bank or in the stock market. A one thousand acre farm, which is not that large in todays scheme of things, would produce a $200,000 income.

I realize if you get hailed or droughted out and the yield doesnt happen and its not insured then it could be a heck of a net loss too.

Curious about your thoughts on this.
 
No, you cannot adequately insure for that. The federal crop insurance total limits you to about 80% of the cost of the inputs seed, chemicals, machinery, no rent so you loose the top 20% of income to cover the inputs plus all the rent so you can never colect more than about half the total cost of putting crop in ground if you loose everything.
 
You can not insure for that high of a return. The real interesting thing is what happens when the numbers change just a little.

We are dry right now. It is hurting the crops total yield. So lets take that 200 bushel down to 175. Then cash Nov. corn was $4.98 one day last week.

So using those "real" life numbers brings the gross down to $875 per acre. So if that is what happens then the BTO is going to lose $125 per acre using IA Gary's production cost numbers.

I personally know of two different farms that have rented for over $400 per acre. The highest I know of is $475 with bins included. Just about all of the ground is $350 plus around here.

The same ground is selling for between 10-12K per acre. Just had a hill farm sell next to me for $5750 per acre and it is only 60% tillable. So there cost per tillable is right at 10K.

Many of the guys are using a different ink pen than I am using. I show red ink in most of the crop pictures of the guys paying high land prices or rents.
 
Thats kind of what I figured. You can't count on having a perfect yield and even if you do achieve it, the price can also be less than you anticipated. Basically there are too many factors that are totally out of the farmers control so you have to anticipate and make allowance in your budgeting for something to go wrong.

What kind of a profit margin in the budget do you think provides enough safety to take these risks? 30% profit if everything goes perfect? 50%? More than that?
 
You must log in or register to reply here.

Similar threads

L
Figuring out ear corn yield
Replies
1
Views
784
paul
P
C
How do they do it?
2
Replies
38
Views
977
Buckeye Oliver collector
B
P
buying farm land as an investment
2 3
Replies
48
Views
2K
caterpillar guy
C
B
How can you get into farming with these kind of land values?
2
Replies
39
Views
3K
Determined
D
J
Call out to David G: Plus reasoning for CRP View!!
Replies
15
Views
1K
Leroy
L
Tractor Parts Tractor Manuals

We sell tractor parts! We have the parts you need to repair your tractor - the right parts. Our low prices and years of research make us your best choice when you need parts. Shop Online Today.

Copyright © 1997-2024 Yesterday's Tractor Co.

All Rights Reserved. Reproduction of any part of this website, including design and content, without written permission is strictly prohibited. Trade Marks and Trade Names contained and used in this Website are those of others, and are used in this Website in a descriptive sense to refer to the products of others. Use of this Web site constitutes acceptance of our User Agreement and Privacy Policy TRADEMARK DISCLAIMER: Tradenames and Trademarks referred to within Yesterday's Tractor Co. products and within the Yesterday's Tractor Co. websites are the property of their respective trademark holders. None of these trademark holders are affiliated with Yesterday's Tractor Co., our products, or our website nor are we sponsored by them. John Deere and its logos are the registered trademarks of the John Deere Corporation. Agco, Agco Allis, White, Massey Ferguson and their logos are the registered trademarks of AGCO Corporation. Case, Case-IH, Farmall, International Harvester, New Holland and their logos are registered trademarks of CNH Global N.V.

Yesterday's Tractors - Antique Tractor Headquarters
Website Accessibility Policy

Back
Top