Farm Lenders Discuss the Ag Economy- Cash Rents, Land Values

Donnelle Eller reported in today’s Des Moines Register that, “A panel of farm leaders explored how much further rents and land values will fall, how growers will fare in growing mega mergers mania, the ag economy and other issues at the Iowa Bankers Association’s annual convention in Des Moines on Monday.”

The Register article indicated that, “Even though farmland values have fallen — nearly 9 percent over the past year, according to a new survey this month — tight supplies, low interest rates and investors looking for alternatives to the stock market have help slow price declines across the state, experts said.

“‘We’re really puzzled why people pay what they’re paying’ for farmland in some areas, [Bruce Rastetter, CEO of Summit Agricultural Group, a diverse farming and investment business in north Iowa] said, even with investors wanting to jump out of the stock market.”

More specifically with respect to cash rent issues, today’s article stated that, “Typically, on Sept. 1, landowners terminate Iowa farmland leases to negotiate higher rents, [Steve Bruere, president of Peoples Co., a Clive farm management and real estate group] said.

“‘This is the first time in our farm management business that we’ve seen farmers terminate the lease’ to negotiate lower rents, he said. ‘A lot of it was driven by conversations with lenders, who said, ‘Hey, are you going to lose money or make money? Are you entering the year with an expected loss?’

“‘This is the fourth year we’ve been in that environment. With liquidity drying up, those conversations have gotten a lot more real.

“‘The days of $400 and $500 (an acre) rents are over,’ he said.”

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