Cash rents????

My sons lost some cash rented ground in the last few years. Some of that ground they had been renting for years. They had taken good care of the ground and left it better than when they started on it.

Some high rollers started the $500 an acre rent bids and I told my sons to not get crazy and keep their eyes on the true profit of each acre.
So they let the ground go.

Just recently several of those landlords have called them asking them to rent their ground again. It seems like the high roller's banks have clipped their wings back. Operating notes are smaller than they used to be able to get. So the April 1st payments are not going to happen.

I told them to meet the landlords but to not rent for much more than what they had been giving as the profitability is not any better than it was then. I also told them to get a multi year contract. This jumping around to the highest biding renter just is not worth it. You can't plan long term a year at a time on crop rotations and fertilization.

I have penciled out corn and beans with the high rents some are paying. Soybeans are always a loss and the corn with any yields under 180-190 BPA with $4.50 net corn (gross - drying and transportation)lose as well. An those numbers will be hard to hold as an average on many acres.

I am recommending that they be real careful on what they bid on rents.

Are you fellows seeing any backing off on the rents/costs?????

You thinking back in the $250s?

They where paying high 2s to low 3s. All up front. Never missed a payment.

As long as corn is over $4 then that works. If corn goes below $4 then they would need to go back down into the mid 2s.

It will depend on what the other inputs do. Seed corn at $100-125 an acre is not going to work very well either.

Historically isn't even high threes more than is really comfy? It only takes one little hiccup and things can go bad. Is that on watered ground?

If it was me, I wouldn't give them a penny more than what they had been paying before.

In our area we had a couple guys that were out of county calling every landlord offering up to $500 and if they called 100 people they would get about two to rent to them but it made everyones rent go up.They buy all inputs out of county and also take all grain to their home county.This year they had several thousand acres that they never got planted but took insurance and now I understand some landlords never got their upfront rent due 3-1.It makes it hard on the younger ones trying to get started.They also are backing out on new machinery purchases and they get no sympathy from me.If you let one go there is always someone wanting to do it for nothing.Kinda like buying hay for a dollar and selling it for a dollar and ordering a larger truck to make more.

There is a lot of settling out coming yet. Tip of the iceberg so far.

I'd be terribly nervous if I owned a farm dealership or a manufacturing company. Everybody bought a lot of iron the past 5 years more than they need. When things get tight, they can coast a few years. Going to get real hard to move expensive iron.......

As to land rent and BTO and on, seems we were better off when farmers owned most of their land, and cared for it and had it that way. This renting most of it on year to year leases, no one cares any more, no one keeps it up. And if you do, someone will come along and try to take it over and mine it out.

Just a bad business model.

Paul

I will chime in here.

Never paid cash rent myself but am a partial landlord on a quarter that is cash rented out now.

All the ground I farm is on shares from immediate family including myself (long story).

Main think I want to say is it says alot about your son's that the owners came back to them when they realized that the grass wasn't as green on the other side.

Also agree that they need to go in with both eyes wide open. In a case like this I would want to see fertility reports etc and negotiate from there.

jt

I rent a lot of poor ground.

bottom line. If you rent it, keep 12 month soil samples.


I don't know what it is like out there. over here, if I put it in, I am renting it until I have the option to take it back out, or the option to pay less when I can't take it out. ground is always better when I leave, but, I get profit.


not a big deal when everyone knows what they have. always a bigger deal when new guy doesn't know or doesn't care. throw enough money at any peoblem and it goes away. big bankroll, equals more power.

I rent a little ground for a reasonable rent which I pay at the beginning of the year--in fact in September, or right after harvest, of the preceeding year. Ties it up when the BTO comes with their offers in January. Had one landlord want to give me my money back tow weeks before planting was to start so the new owner could rent for more. May answer was takes more then that to buy out the rent since seed and fertlizer is bought and early fertilizer is applied. Also reminder her it is customary to tell me in September. In any case that's between her and the new owner. Finally the new owner calls to say "well I could rent this year".

As to costs. I usually figure the cost and put the money in escrow right around the first of the year and this year it was all talk but no action. I figure on my own ground long as corn is above $4.25 I'll break even if I had to pay myself it wouldn't. I'm not changing any equipment, just maintainance.

I am not seeing any backing off and in a few instances a ratcheting up on rent rates. There are guys around with plenty of off farm income looking for a way to spend it. I really do not like the local long term outlook for the bootstrap guys like myself. As I have pointed out there seems to be tremendous evidence locally of under the table bids to go with the above board bid on a given piece of ground. It's the only way I can explain the disparity in rates from tract to tract when the difference in soil types is not tremendous.

Always rented to one guy but he paid low that was fine till he plowed waterways i am very easy going and had let a lot slide this farm is very flat good deep productive soils.
When i put it up for rent i did not ask for a price instead i asked how are you going to farm it. i was amazed at some of the responses .it also changed some of my thinking i ended up renting to a multi generational family fairly large operator he offered high rent soil samples cash up front was very polite and even brought the next generation along .so to me its not the cash its the way you farm its my thought to leave workable ground for the next generation not a sterilized medium good for only certian crops so chemical application is important to

People will pay more to rent across county lines for insurance. Cash rented ground in 5 counties let's them have a really bad year every year in one county and not hurt their running average.

Dave

My renter of 21 yrs gave mine up last year. He has land on both sides of me which made him a 1/2 section. Young man in his early 30s now is the renter. He knew soil and FSA conditions before renting in the 3s.

Wish land rented for 300 or better here, I'd rent mine out. As of 2 years ago it was about 50-60 and acre here.

Rick

I am about 40 miles from JD Seller, it hit $500 here a couple of years ago. It was a couple of operators that did not own any ground and pushed it up for everyone.

JD Seller,

Wow, those are some wild rental prices in your area. I agree with you that I would tell the boys not to pay those kinds of rents either.

I have heard of people around here getting $250 - maybe even $300. Similar to your area, around here the rents have been driven up sharply by big company farms coming around and offering ever-higher rent.

But we don't charge that much - though our land is tiled, we only have about 75 acres tillable (once you knock off the building site and the slough ground). And we have an excellent renter who cares for our ground as if it were his own land. And when crops are good - he gives us a really nice bonus.

I have been helping my dads next door neighbor cense her husband died last year. He had been letting a guy farm it on 1/2s for many years and she didn't want to do this any more, Just wanted to cash rent it. Yesterday I stopped by to talk with her about this a guy pulled in and said he had herd the ground might be up for rent and wanted to make a cash offer to rent it. She told him to talk to me about it and I said whats the offer?

$35 an acre because its marginal ground. WHAT! Are you kidding me? Nope! That's all it worth. I said I gave $35 an acre 30 years ago and this aint marginal ground as it made 46 bu an acre beans last year and it was an off year at that. I told him we will be taking bids on the ground and it starts at $125 an acre and we already have 6 bids for it over that price. Who ever farms it will take care of the ground (fert and lime) keep the weeds mowed around to fields and keep the drive ways up (gravel) for simi trucks and take care of any trees that fall in the fields (long story on this issue). I told him if he wanted to put a real bid in (in righting) it would be considered. He left!

I don't think this is to out of line as this is normal around here to rent ground this way. The cheapest ground I have herd of is $85 an acre to $300 an acre. Right now its over $200 bid on the place for 80 acres. Around us we are loosing farms to housing so there is less ground to farm every year, So the market sets the price on farmable ground and who is willing to pay for it. Bandit

What about the previous year when the new renters never put any dry fertilizer down, just nitrogen? Who is going to make this up? A lot of cash rent farms are getting mined. IL Family Farms rented a wet 160 close to me and paid $450. When they went broke , the owner wanted a neighbor to farm it but had no soil tests. Neighbor offered $300. A guy 60 mile SE of me rented it for $450.

I cash rent 20 acres of marginal ground from a friend for $250 but it is next to my own ground. With today's prices it is not bad but with lower prices it would be a premium. The best way is 50/50 and then the landlord is making much more than the tenant but it is more fair.

I told my landlord that the current rent will not work and I have all the numbers on paper to show him.He said he will come over soon and we will work something out that works for both of us because he wants me to farm it.A BTO had it before and farmed it all as two feilds and no contours.We have laid it out in strips and contours as well as made all waterways big enough to cut hay from.He likes to brag about how nice the place looks now compared to a few years ago.I try to keep him imformed of what we are doing and take care of the place like we own it and that is paying off as he wants to make sure we can make a profit.He knows the BTO's will give more rent but they can not farm with 12 and 24 row equipment like we can with 4 row equipment.Sometimes I look at the risk and wonder if the profit is worth it on rented land.We have all older equipment and I have very little extra help anymore.