University of Nebraska–Lincoln Know how. Know now. Please Thank our sponsors! The Nebraska Soybean Board North Central Risk Management Ed Ctr. Landlord/Tenant Cash Lease Workshop Sponsored by:
Landlord - Tenant Cash Lease Workshop
Jul 01, 2015
Current Land Values and Cash Rental Rates
(From Landlord-Tenant Land Lease Workshop, Dec. 18, 2012)
(From Landlord-Tenant Land Lease Workshop, Dec. 18, 2012)
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University of Nebraska–Lincoln
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Please Thank our sponsors!
The Nebraska Soybean BoardNorth Central Risk Management Ed Ctr.
Landlord/Tenant Cash Lease Workshop
Sponsored by:
University of Nebraska–Lincoln
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Landlord/Tenant Cash Rent Workshops
Agenda Where we are (Current Prices) Landlord/Tenant Relationships/lease considerations Break Alternative lease arrangements Pasture Leases
Workshop – two words – work your brains – shop our ideas!
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Presented by:Jessica Johnson
Prepared by:T. Lemmons & A. Vyhnalek
Adapted from:B. Johnson. (2013). Nebraska Farm Real
Estate Market Report. UNL Extension
Current Land Values/Rental Rates
Contact:Jessica Johnson
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Northwest $715/ac
13%
North $1055/ac
20%
Southwest$1750/ac
31%
Central$3750/ac
27%
South $4460/ac33%
Northeast $6162/ac
24%
East $7185/ac
18%
Southeast $5400/ac26%
State Average $3040/ac
25%Source: Annual UNL Nebraska Farm Real Estate Market Surveys
Average Value of Nebraska Farmland and Percent Change from Year Earlier
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2012/2013 Values and Recent TrendsAgricultural
Statistics District2012/2013 All-Land
Average ValueDollars/Acre
2011-2012% change
2012-2013% change
Northwest 642/715 23 13North 855/1055 21 20Northeast 4908/6165 35 24Central 2925/3750 34 27East 6012/7185 31 18Southwest 1327/1750 34 31South 3352/4460 32 33Southeast 4293/5400 22 26Entire State 2410/3040 31 25
Source: Annual UNL Nebraska Farm Real Estate Market Surveys
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Selected Land Values by type 2012-13Land type Northwest North
Dryland – no potential $700 6% $1155 8%
Dryland – irr. potential $730 7% $1920 18%
Grazing – tillable $425 4% $1050 19%
Grazing nontillable $370 12% $500 11%
Hayland $780 26% $1150 21%
Gravity Irrigated land $2875 18% $3100 18%
Center pivot Irrigation land $3115 23% $5225 32%
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Annual Net Rates of Return to Land - % Northwest
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Annual Net Rates of Return to Land - %Statewide
1.8
2.8
3.8
4.8
5.8
6.8
7.8
6.0
2.9
4.9
1.9
7.1
3.4
Dryland Cropland Grazing Land Irrigated Land
Northwest 8.3
Northwest 4.4
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Average Effective Interest Rates on Non Real Estate Bank Loans Made to Farmers
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Alternatives for Investing?
Passbook savings Certificates of Deposit Stock Market/Bonds Gold (other commodities)
Gold
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Notes about Land Sales
First time in history – state sales topped $3,000 per acre
Statewide Northwest NorthCash Sales 49% 64% 27%Mortgage 47% 30% 55%Purchased by an Active Farmer/Rancher
81% 64% 59%
Out of State Buyer 2% 21% 8% Sold by Estates 38% 15% 17%
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Perfect storm for land value increase
•Availability of Money – profits from farming•Low interest rates•Lack of land for sale•Limited return from any other investment•Farmers willing to expand their operations
Future?! – Bubble might deflate (not burst?)
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Renting Farmland
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Reported Cash Rental Rates: Dryland CroplandAverage % Change
from 2012High Low
Northwest b b b bNorth b b b bNortheast 234 10 315 175Central 118 7 155 85East 219 7 281 165Southwest 59 5 73 46South 125 8 155 100Southeast 174 7 230 127Source: 2013 UNL Nebraska Farm Real Estate Market Developments Surveyb: Insufficient number of reports
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2013 Nebraska Dryland Cropland Rates Paid Per Acre
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Reported Cash Rental Rates: Gravity Irrigated Cropland
2013 Average
% Change from 2012
High Low
Northwest b b b bNorth b b b bNortheast 319 12 394 280Central 260 13 352 212East 320 8 384 249Southwest 210 14 267 183South 275 11 323 216Southeast 299 12 359 242Source: 2013 UNL Nebraska Farm Real Estate Market Developments Surveyb: Insufficient number of reports
University of Nebraska–Lincoln
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Center Pivot Irrigated Cropland2013
Average% Change from 2012
High Low
Northwest 225 13 265 170North 265 13 285 208Northeast 379 15 477 302Central 287 12 358 240East 355 13 441 281Southwest 269 14 325 210South 313 12 363 259Southeast 345 13 427 268Source: 2013 UNL Nebraska Farm Real Estate Market Developments Surveyb: Insufficient number of reports
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19811983
19851987
19891991
19931995
19971999
20012003
20052007
20092011
2013$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
Cash Rental Rates for the Northwest District
Dryland Gravity Irrigated Center Pivot Irrigated
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Reported Cash Rental Rates 2013: Pasture
Average % Change from 2012
High Low
Northwest 13 0 17 9North 16 0 20 12Northeast 53 4 67 38Central 35 6 45 26East 49 16 64 38Southwest 17 6 24 14South 37 3 43 54Southeast 42 8 54 28Source: 2013 UNL Nebraska Farm Real Estate Market Developments Survey
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Pasture Rents – by cow/calf pair per month
North NorthwestAverage 39.00 30.50High 50.00 36.85Low 30.00 24.65
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Cash Rent Summary
• Note Differences in numbers
• NASS survey
• UNL Cash Rent survey
• Coffee Shop
• Cash rents clearly up recently – but don’t always trend with land values (10% vs 20+%)
• When does the ‘up’ trend end?
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Gathering Storm Cloud
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Cash Rent Summary
Looking at corn prices, rents should stabilize, or start down Probably not the resource to support $500/acre rent
Rents are still determined by supply and demand
Tenants need to sharpen the pencil Landlords need to be understanding
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Jessica Jo Johnson Asst. Extension Educator Phone: 308-632-1247 Email: [email protected]
PanhandleAgEcon & WNEcrop
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