Land Rent

[charliep]

I just get blown away at the prices of land rent. In our area guys are still paying 40/acre rent. Listening to all the posts on this website everyone can't make any money, but if there is a quater up for rent everybody jumps at it. I think we sound like a bunch of frigging hyppocrats.
We can't make money with the acres we have but taking more on will make everything better. The guys who are doing this & reading this, fill me in on what I'm missing?

[cowman]

Not sure how well your area does for production but figure it out: $50 for fertilizer, $23 for broadleaf spray(don't know if you have to spray for wild oats), $10 for seed. $93?
If you already own the equipment and have the time what does that cost you?
In my area anything less than a 100 bu/acre barley crop would be considered a failure. If you think barley will be $1.85 next year then maybe it won't work but historically it is worth more? At $2.50/bu. it will work.
By the way the going rent around here is right around $60/acre with decent hayland closer to $80/acre.

[cowman]

Sorry should be $83 not $93.

[cowman]

CowMan, I know how to figure out my inputs. I'm hoping that what you gave for inputs that you weren't finished yet in adding. My inputs with everything factored in on rented land are at 185/acre, and we run old iron. In your area 100bu/acre barley is a dissapointment, in our area it is too, but 75-80bu/acre is a reality. In our area anything less than 45-50bu/acre is dissapointing in canola but it happens quite often when you only get 30-35, then what?? I guess what I'm saying is we can't run at these tight of margins. And if anybody is thinking that if I'm only paying 40/acre that we are making money forget it because were're not.

[dalek]

Don't know about cowman, but I haven't figured out the secret of peeing in the fuel tank and making the equipment work. Still need a fuel truck on a regular basis.

[sawfly]

was looking at Sask ag and foods costs of production sheets.
yeilds may vary but their a fairly accurate picture.
most crops are barley break even or at a loss , with only the varible costs taken off. (seed fert chem fuel repair crop ins)
Take rent,(15-50)$/acre off that, then theres storage, deprecition,and pay something for your own labour.
with nothing off for labour, losses run from 30-90$/acre.
sure i could say well my yeilds are better than that or costs are lower.But a drought or frost could cut our gross in half in a hurry,
cais isnt gonna save you.

[cowman]

Well no I didn't say the inputs quit at fertilizer, seed and spray? What I did say if the tractor, seeder, and combine are sitting there generating zero dollars then it might work? Yep there are going to be some fuel costs? And depeciation? and repairs? And less time watching Opray or whatever?
And hey if it doesn't work for you then simply don't do it? Lots of boys lined up to take the plunge!
Consider this: For the last 17 years I have rented the little bit of grain land I own on a crop share deal? One third to me, Two thirds to him...and I pay my one third of chemical expenses. He does all the marketing, I supply all the storage. I can truly say I doubt I ever got less than $60/acre...barring this year when I opted to keep my barley? Some years(canola) it worked out to over $100/acre! My own preference would be to grow canola every year but you know how it is with a rotation?
So in my area $60/acre cash rent is actually a steal, most years? And probably $40/acre in your area is a steal, in most years? Maybe you should run the idea out, about a share deal? Then you take away part of your risk...but maybe give up some of your profit?
By the way I gave up grain farming in 1988 because frankly the money sucked! Too small to afford high priced equipment.
I am not saying grain farming makes any sense? But if you already are in for the long haul then adding a quarter for $6400 rent really should make you a few dollars? How would you like to be the guy owning it instead? If you think you're getting ripped off then go for it...buy it!

[lakenheath]

One word. Stupid. That is it. Farmers are stupid when it comes to land prices and rent. Nobody can agrue with that. All driven by either a pissing contest with the neighbours, greed or just sheer stupidity.

[WoolyBear]

In our area, the big guys are dropping rented land like flies...... I wonder how many will pick up more on the eleventh hour at a 1/4 of last years rate come spring? Lots of folks wondering if its worth the effort given the likelihood it seems for droughts, or excess moisture, or frost, or just plain crap prices.

[WoolyBear]

I read all the threads posted, and you can definitley tell Cowman doesn't farm anymore. Cowman I can tell you right now that if you get $60-100/acre rent your renter is not going to be around long. There is no way you can afford that price this day in age.

[WoolyBear]

Maybe these renters are hoping on a share of the surface lease monies from the oil companies........ or maybe they have a first option to buy, and then get it all. But in most cases I think its just coffee shop talk that gets the rent up as high as cowman says. Another fish story maybe?

[cowman]

No fish story. The land around here never stays unplanted. The neighbor has been pondering renting out his land this year and the phone has been ringing off the hook!
This area has a lot of old families who own the mineral rights and literally they couldn't spend the money in one hundred years. Cash rents are still right in that $60/acre for grain land and $80 for decent hay.
It isn't excessive at all when you realize land sells for $3,000/acre here? $60 acre is what... about 2% return? Not very good.

[cowman]

Also consider in this area we have a large number of European farmers coming in? $3,000/acre is incredibly cheap land in their eyes? Land in Holland typically sells for $100,000/acre or more...if you can find it!
Of course coming from developed countries they have no interest in living in the sticks and prefer to be close to a decent sized city. They see this country as a great land of opportunity for agriculture? They see rental rates and land prices as a virtual fire sale here?

[Ron]

Cowman is right?
canola
seed 30
fert 48
tua/chem 24
custom seeding 13
insurance 15
land cost 65
harvest cost 15
fuel 5
$215/acre cost
40 bu (easy average here) @ $6 (Agricore nov 2006)
$240 gross
$35/ac net
The $60/ac rent is alive and kicking in central alberta (I dont like it but)

[lakenheath]

Ron your pencil is dull.

Where is depreciation per acre?
Where is interest expense per acre?
Where are repair bills per acres?
Where are maintenance costs per acre?
Where are living costs per acre?

You are one of those farmers who's pencil gets them in one hell of a mess.