Minding Ag's Business
Landlords Refuse to Blink
My inbox is filling with irate landowners who took offense at a column I wrote for the October issue of Progressive Farmer on "fat cat rents." Actually, the thrust of the article was that average and below-average rents weren't likely to budge in 2015, only the "fat cat," above-average leases like we've seen at those $400-to-$500/acre Iowa cash rent auctions a few years ago. My message must not have been clear, though, because the landowners' responses showed how sensitive this issue remains:
"So we FAT CAT landlords are supposed to adjust our cash rents to tenants, huh? Let me tell you this, I will lower my rent when I go the county treasurer's office and ask for a reduction of my property taxes due to commodity prices now in the crapper. My property taxes have gone up $25 an acre in the last three years and for 2015 they are slated to take another larger bite off my net cash rent. I have not raised my rent to my tenant in the last three years when he made a ton of money on my farm when corn hit $7+ bushel. Today’s farmer does not have to go crying to me when they are all protected by revenue insurance. Something that was not available to me when I farmed. In fact a farmer today is guaranteed not to go broke. Look for classified farm auctions today. Very, very few. Only retirement or health related auctions.
Most tenants also own some farmland and are they going to negotiate with the county treasurer to scale back the land taxes?
They can pay upwards of 9000k an acre for land and that does not seem to be any problem. Figure a simple interest rate at 3% and that comes to $270.00 and acre which does not include taxes.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
I farmed all my life and am now retired as I had no sons to take over the farm. Most years struggled. So don’t be telling me to negotiate lower rents. I feel I am not gouging on the rent as they could not own my land for the rent I charge them. So get off our backs and tell our side of the story for once." -- Respectfully, Kenneth from Nebraska
Here's another unhappy landowner:
"As a landlord I keep reading how 'Rents' are too high and unsustainable at current grain prices! I understand 'landlords' do not advertise in Farm Magazines so we have no voice. However, I want to see more equitable headlines like: Fertilizer costs prohibitive $600 per ton, Fuel at historic highs, $300 or more for 1 bag of seed corn, $32,000 irrigation pivots increase to $70,000, farm tractors over $300,000, pickups $50,000 to $75,000, Real Estate Taxes up and up. On and on. You get the picture? Authors single out landlords as the evil ones because we do not have a voice. There are many players in this agriculture game. I need to see articles concerning all inputs or I am going to cancel all my farm magazine subscriptions!! It's hard on my blood pressure!"
--Sincerely, Sam of Nebraska
[Marcia's Note: For the record, DTN's weekly fertilizer column has been reporting the stalemate in fertilizer prices for months, with prices failing to match dramatic drops in commodity prices. We've also reported how some growers may be ditching stacked seed in order to hold costs down in 2014. Cash rents get the most attention, however, because they tend to be the top cost in corn production.]
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