Price of Rock County crop land is above state average
Landlords constantly call county agriculture offices and ask, “How much should I charge for rent?”
The answer is that there is no answer.
No agency oversees or sets the price to rent crop or pasture land. And nobody wants to admit what they pay for rent, said Norm Tadt, senior conservationist with the Rock County Conservation Department.
“It’s a very elusive number,” Tadt said. “Nobody wants to come clean.”
If a tenant admits how cheap his rent is, someone might call the landlord and offer a higher bid, Tadt said.
And cash croppers, who frequently rent more than 1,000 acres, need every inch, Tadt said.
“They make money on every acre they plant,” Tadt said. “That’s the concept anyway.”
But with a few exceptions, there’s no such thing as cheap land rent in Rock County. Because renters and landlords won’t share rent prices, The Janesville Gazette polled municipalities that rent park or industrial park land to crop producers.
Some municipalities put fields out for bid, so the prices are a good measure of what renters pay, said UW-Extension agent Jim Stute.
Cropland owned by the county went for $167 per acre per year in 2007, Stute said. Stute has heard some renters in Rock County pay as much as $200 per acre.
That’s a big difference from the $72 per acre average in Wisconsin, according to recently released National Agriculture Statistics Service data.
And with the price of grain skyrocketing, the phone has been ringing off the hook with questions from landlords, said Judy Schambow, Rock County Field Services Agency director.
“The subject of land rents has come up constantly,” Schambow said. “They want to know, ‘Exactly how many acres is my farm? What kind of benefits are farmers getting? What are other rents going for?’”
Schambow can’t and shouldn’t be advising landlords on what to charge, she said.
WHAT FACTORS DRIVE LAND RENTS?
-- Yields and yield potential:
The United States Department of Agriculture keeps track of yield potential for different soil types. The Rock Prairie east of Janesville boasts some of the highest quality soil in the world. But it’s all about location, and you get what you pay for, Stute said.
“If you drive down County A, you’ve got plano soils on one side (the south) and kidder on the other,” he said. “On one side of the road (on the plano soil), you can get 150 to 200 bushels of corn per acre. On the other side of the road, you’ll get 85 to 120.”
Plano soils are worth $150 to $160 per acre in the Cropland Reserve Program, according to Rock County Farm Service Agency statistics. In CRP, the government pays farmers to take land out of production and maintain it with soil preservation practices.
Kidder soils are worth $110 to $150 in CRP. The county’s average soil rental rate is $130. CRP rates should not be used as a guide for cropland rental, Rock County FSA Director Judy Schambow said.
The price of grain is drumming up competition.
Soybeans traded at $10.30 per bushel in Evansville on Thursday, and corn traded at $3.70.
Compare that to $5.98 for beans and $3.21 for corn this week last year. It’s convincing some landlords to go back to planting, Schambow said, making the competition for precious acres even tighter.
-- Price of land:
A landlord has to charge enough to cover his mortgage, Tadt said. With cropland prices at $3,000 to $6,000 per acre, cash can get tight.
As an example, no land has been for sale in the southeast corner of the county for years, Tadt said. But because of the recent death of a farmer, several thousand acres will soon hit the market.
“When there’s several thousand acres that go on the market at one time at $5,000 per acre, who’s got that much money for that? And if you’re paying $5,000 per acre, what’s the cash flow on this?”
THE BOTTOM LINE
Land rent is one of the only variables in farmers’ input costs. Everybody pays the same for fuel, fertilizer and seed, said Jim Stute, UW Extension agent.
So if you’re paying more than the land is worth for rent, it might cut profits, he said.
“The big difference is land rental,” Stute said. “If you get a dry year and it doesn’t yield as well, it can be a problem. If you’ve bid really high on land rent, you might not be able to make it.”
Even on one field, yield potential can change from acre to acre.
“Some farms have wet spots and dry spots. There are some fields that are pretty sandy just west of river. If some of those guys got 60 bushel, they’d be happy,” Tadt said. “They still pay rent on those acres. There are very, very few landowners who will give their operators a break.”
IT’S NOT JUST ROCK COUNTY
Clark County is in an area of the state with the cheapest land rates, according to 2004 USDA statistics.
In 2004, annual cropland rent in northern Wisconsin averaged $39.70 per acre compared to $94.20 in south central Wisconsin.
The 2004 data is the most recent available. The USDA will send out a survey this month to get fresh numbers.
For years, the Clark County Conservation Department rented cropland for $32, said a spokeswoman for the department. In 2007, the county put the fields out for bid, and a farmer paid $116 per acre.
That’s more than farmers pay to rent land owned by the city of Janesville, even though Rock County’s average yield rating is 108 bushels of corn per acre compared to 76 in Clark County.
Last updated: 11:41 am Thursday, December 13, 2012