USDA Survey Shows Cash Rents Rise in 2012

Rates expected to remain steady in 2013 due to drought

Published on: Oct 2, 2012

2012 was a tough year for cattle producers with record corn prices and poor pasture conditions due to drought forcing them to feed hay during the summer. Moving forward, with drought's impact on pasture and hay we will see continued downsizing of the cattle herd for a while, Plain says.

"With fewer cattle there will be less demand for pasture land," Plain said. "On the other hand, we've been converting some pasture into cropland. Also, fertilizer prices have been high enough that we haven't been able to do a lot of fertility practices to increase carrying capacity. My expectation is that the demand for land to rent is still going to be fairly strong."

Establish an understanding

According to Plain, the rapidly increasing sales value of land is such that many producers just can't swing the purchase price, so they will probably be in the market to find some land to rent at a reasonable price. He recommends producers and landowners who are looking at a new rental arrangement for next year to communicate.

"We encourage landlords and tenants to try to get it down in writing, particularly with respect to terms of the lease and when it is going to be renewed," Plain said. "Lots of times you end up with some misunderstandings about what date the landlord or the tenant need to let each other know if they are going to be farming together again in the coming year."

Other issues that need to be discussed include maintaining fences and waterways and keeping the property mowed. Plain says those type of issues are little things that if dealt with up front can lead to a very good relationship between the landlord and tenant and prevent problems later.

Source: University of Missouri