LAND info PeoplesCompany. Click here for a new post with information on farmland rental rates. There has been a lot of chatter in the past few months regarding rental rates for Corn and bean prices are significantly down from the record-high prices we saw of the past few years.

But as a landowner, how do you know how low prices will really go in ? We want to be fair to the farm operator and adjust leases if the market indicates it is necessary. This number will be a projection of the cost of seed, fertilizer, chemicals, crop insurance, drying, storage and interest.

Costs were estimated by checking local elevator prices.

A new way for landowners to lease their farmland - The Globe and Mail

This number takes into account machine cost and harvest delivery charge. Gross Less Variable Costs will an estimate of the cash available to pay cash rent and operator return. This is the money left in the pot at the end of the day for landowner income in the form of rent and farm operator income. Remember, I did not include rent into either expense column so rent due to the landowner still needs to come out of the far right column Gross Less Variable Costs.

These numbers certainly do not paint a pretty picture. I was curious to know how these numbers lined up with rent rates I have in place for the growing season. Only a cent increase in corn prices to get the farm operator out of the red.

If corn and bean prices remain as low or dip farther, will we see rent rates decrease as significant as my simple math calculations may warrant? Farm operators still have an appetite to retain and rent additional lease acres. I had very few lease terminations by the farm operator this past August and receive calls weekly from farm operators looking for new acres to rent.

In fact, in northwest Iowa I recently requested bids for an average yielding farm with acres. And if we plugged these rent rates into our equation, almost all of the bidders were offering a rent rate that put him in the red next fall. Considering our quick math, how should the landowner respond?

I have really played both sides of the coin here and have not given a definitive answer either way of staying strong at current prices or reducing for At this point, I think it is more important for us to realize that rental rates for are still across the board and not in line with the market.

And I foresee many landowners will get by next year without a rent adjustment as many farm operators will hope for prices to increase and smart marketing with the crop. If you are in the position of renegotiating your lease for and getting pushed to reduce rent, there are still opportunities to maintain the income you have become accustomed to in the past few years. A FLEX lease sets a base rent with a bonus structure that takes into account market volatility.

If there is a bump in the market or the farm yields high numbers, the landowner gets to share in the increased revenue. This lease structure takes some of the uncertainty out of the picture for the landowner as there are still so many unknowns as what the year will bring.

Custom farming is a good option if you have an appetite to take on some of the risk of farming. In this scenario, the landowner pays all of the crop expenses; hires a local operator to plant and harvest the crop for a flat fee per acre; and receives all of the crop revenue. This may sound contradictory to our discussion as we have shown a financial loss for Iowa Beginning Farmer Tax Credit allows landowners to earn tax credits for leasing their land to beginning farmers.

Administered by the Iowa Finance Authority, landowners can receive a 7 percent tax credit for cash rent leases, 17 percent tax credit for crop share leases, and additional credit available if the beginning farmer is a veteran.

Farmland rent-past, present and future | MSU Extension

No one knows where yields and prices will end up next year. And to add another layer of complexity, we are still learning how the new Farm Bill payments will affect the bottom line. In general, we know PLC and ARC payments will be significant this year and next so landowners and farm operators should take that into consideration.

Running through October price projections is simply a good exercise to better understand current volatility and prepare us for potential lease negotiations moving forward.

Farmland For Rent: Rental Rate Calculator - Peoples Company

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