Cropland values remain strong

Landowners and farmers should be patient in coming months when it comes to setting cash rents for next year.

Dan Grant

Published: Aug 11, 2012

Landowners and farmers should be patient in coming months when it comes to setting cash rents for next year.

What they see now in terms of crop prices may not be the price later this year and in 2013.

“Setting cash rents based on what (crop) prices look like now probably is not the best strategy,” said Gary Schnitkey, University of Illinois Extension farm management specialist.

“Right now we have really high prices,” he continued. “But following the pattern of a typical short-crop year, we’d expect to see crop prices peak early and then fall.”

Schnitkey believes some farmers already may be in a bind this year because they signed leases for high cash rents on property that may yield little or nothing because of the drought. The average cash rental rate in Illinois from 2011 to 2012 increased $28 per acre.

“That’s the biggest increase I’ve ever seen,” Schnitkey said. The situation could be even worse for those who hedged their crops prior to harvest and now won’t have the bushels to fulfill those contracts.

“Those guys will be hurting,” Schnitkey said. “This year we’re looking at lower revenue. There will be some farms not in the best of shape.”

At this point, the farm management specialist believes cash rental rates likely will remain flat for next year.
Schnitkey will discuss the situation, and how to set cash rents for next year during two land lease programs this month in Northern Illinois.

The programs will be from 9 to 11 a.m. Aug. 30 at the Grundy County Extension office in Morris and from 6 to 8 p.m. that day at the Sycamore Historical Museum in Sycamore (DeKalb County).

For more information about the lease programs, call the U of I Extension office in Grundy County (815-942-2725) or DeKalb County (815-758-8194).

Overall, land values through the first half of this year remained strong, USDA reported this month. Cropland values increased by an average of $450 per acre (14.5 percent) to $3,550 nationwide.

In Illinois, cropland values the past year increased 17.2 percent to an average of $6,800 per acre.

The trend of higher farmland values hasn’t been the same everywhere, though. Cropland values through the first half of this year decreased 3.8 percent in the Southeast U.S. compared to the same time last year.

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