"Where Fillmore County News Comes First"
Wednesday, June 3rd, 2015
Volume ∞ Issue ∞
Fri, Mar 25th, 2011
Posted in Agriculture
Posted in Agriculture
Earlier this winter I completed the Houston County Land Rent Survey, and now have results from the Fillmore County Land Rent Survey. In those two surveys not one landlord or renter projected rents to decline from 2010 to 2011. So is this a land price bubble and a land rent bubble? Only time will tell!
Another year with a great response to the Fillmore County Land Rent Survey, I would like to thank all those who responded. In particular, I would like to thank Tammy Martin, FSA director, for doing the mailing with the FSA newsletter. I also need to thank Kristi Ruesink; the Excel spreadsheet she produced makes it easier to tabulate the results.
The response included 146 parcels which totaled 14,375 tillable acres. In the survey, I ask for both the 2010 actual rent paid and the 2011 projected price per acre. To jump to the bottom line, the average rent reported paid in 2010 was $150.62 per tillable acre. Rent for 2011 is projected at $168.28 per acre. We also had a huge range, from $50 - $400 per acre.
I have come up with a number of ways to account for the large range in land rents. As they say in the real estate sales business, "Location, location, location!" In land rental I might give it only two locations rather than three, but it is a factor. Other factors I have come up with include: parcel size, soil type or quality, fertility, records or proven yields, and then the intangibles.
The last few years I have sorted by acreage size and have seen similar results. Parcels 20 acres or less were projected for 2011 at $141.74 per acre. Those from 21-up to 80 acres averaged $144.19 per acre. This year that is about a $27 discount for small parcels. No one is going to haul machinery from near Cannon Falls to rent a 20-acre parcel.
Soil type or quality- here I hope I quote my neighbor Paul Sikkink correctly. He felt his Uncle's farm always would yield twenty bushels of corn more per acre even if everything was done exactly the same on both farms. That is soil type.
Fertility-has there been manure applied as fertilizer for the last 10, 20, 30, 40 years on that parcel of ground? Has the pH been maintained with lime applications?
Records of past yields or proven yields- earlier this winter I shared some interesting studies out of Purdue on how low-yielding corn ground could lose money, while high yielding ground could justify higher rents and still make money.
The intangibles: "Is this a landlord you want to work with?" "Is this a renter you want to handle your farm?" Do you pay extra for the future opportunity to rent the land, perhaps even buy the land? Some short term rental agreements end up lasting a long time. Very close to my home a property was recently sold that had been rented from one family to another for over 65 years.
When rental payments are made is also of interest. The most common, by far, is the first half in the spring and the second half in the fall.
½ spring, ½ fall 65%
All fall 11%
All spring 17%
1996-2011 Fillmore County Land Rental Survey Results
1996 Average Cash Rent Reported~$75.00 /tillable acre
1997 Average Cash Rent Expected~$78.00 /tillable acre
Range of Responses $52.00 - $100.00 /tillable acre
1997 Average Cash Rent Reported~$81.00 /tillable acre
1998 Average Cash Rent Expected~$82.00 /tillable acre
Range of Responses $50.00 - $110.00 /tillable acre
1998 Average Cash Rent Reported~$84.95 /tillable acre
1999 Average Cash Rent Expected~$85.29 /tillable acre
Range of Responses $17.00 - $120.00 /tillable acre
1999 Average Cash Rent Reported~$86.95 /tillable acre
2000 Projected Cash Rent $85.77 /tillable acre
2000 Average Cash Rent Reported~$89.85 /tillable acre
2001 Projected Cash Rent $91.64 /tillable acre
Range of Responses $39.00 to $135.00 /tillable acre
2001 Average Cash Rent Reported~$93.22 /tillable acre
2002 Projected Cash Rent $95.81 /tillable acre
Range of Responses $50.00 - $135.00
2002 Average Cash Rent Reported~$98.10 /tillable acre
2003 Projected Cash Rent $101.71 /tillable acre
Range of Responses $38.00 - $135.00
2003 Average Cash Rent Reported~$98.91 /tillable acre
2004 Projected Cash Rent $101.15 /tillable acre
Range of Responses $70 - $150
2004 Average Cash Rent Reported~$100.60 /tillable acre
2005 Projected Cash Rent $102.09 /tillable acre
Range of Responses $18.18 - $145.00
2005 Average Cash Rent Reported~$110.09 /tillable acre
2006 Projected Cash Rent $112.49 /tillable acre
Range of Responses $75.00 - $140.00
2006 Average Cash Rent Reported~$106.95 /tillable acre
2007 Projected Cash Rent $108.56 /tillable acre
Range of Responses $75.00 - $140.00
2007 Average Cash Rent Reported~$104.62 /tillable acre
2008 Projected Cash Rent $110.32 /tillable acre
Range of Responses $73.00 - $150.00
2008 Average Cash Rent Reported~$133.62 /tillable acre
2009 Projected Cash Rent $145.43 /tillable acre
Range of Responses $50.00 - $250.00
2009 Average Cash Rent Reported~$152.89 /tillable acre
2010 Projected Cash Rent $156.48 /tillable acre
Range of Responses $60.00 - $230.00
2010 Average Cash Rent Reported~$150.62 /tillable acre
2011 Projected Cash Rent $168.28 /tillable acre
Range of Responses $50.00 - $400.00
When I look at the 2011 cash rent projected at $168.28 and compare it to the 1996 cash rent reported in the original survey, it works out to an average increase of $5.83/acre/year. Much of that increase comes in the last few years.
For townships with three or more parcels reported, I create a more detailed report. If interested contact the Fillmore County Extension Office at 507-765-3896.
Another source of land rent information is the FINBIN numbers available at www.cffm.umn.edu then click on
Publications and "Rental Rates for MN Counties - 2010." These numbers are extracted from FINBIN -- a database of farm record summaries of nearly 2,400 Minnesota farmers. The farmers participate in the Minnesota State Colleges and Universities (MnSCU) Farm Business Management program as well the Southwestern and Southeastern Minnesota Farm Business Management Associations. The historical trend in rental values is used to project what average county land rental rates might look like.