By David Bau
The National Agricultural Statistic Service with the USDA released the county farmland rental rate estimates for 2017. After increasing continuously since 2007, statewide average rents went down for the third year in a row. The state average cropland rental rates declined from $185 in 2014 to $180 in 2015 to $170 in 2016 to $166 in 2017, as indicated in Chart 1 below. This represented a 2.4% decrease from 2016 to 2017 and 5.5% decrease from 2015 to 2016 and 2.7% decrease from 2014 to 2015 Previously rental rates had a 4.5% increase from 2013 to 2014, 18% from 2012 to 2013 and 11.1% from 2011 to 2012.
Statewide Irrigated rental rates declined from $210 in 2015 to $185 in 2017 almost a 12% drop.
Pasture rent average increased from $26 per acre in 2014 to $28 per acre in 2015 to $30 in 2016 and 2017 or an increase of 7.1%.
Table 1 below lists the actual farmland rental rates by county from Adult Farm Management Records. Since farmers and landlords are starting to negotiate 2018 farmland rental rates and the last actual numbers available are for 2016, I have listed estimated rental figures for 2017 and 2018. For 2017 I heard many times, that rents were down $10 to $20 per acre, although some rents went up and some remained the same. In Table 1 below, I estimated a 2.5% decline in 2017 from 2016. What direction should 2018 farmland rental rates go? In the table is an estimated 2.5% decline in rental rates from 2017 to 2018 due the continued decline in corn prices.
The column third from the right in bold is the latest 2017 USDA county estimate. Property taxes increase although assessed values are starting to decrease and the Minnesota legislature passed a subsidy to offset some school referendum costs. Profits continue being squeezed by low commodity prices that do not cover all of their costs.
It will be a very challenging year for both the landlord and farmer to determine where the 2018 farmland rental rate should be? Up? Down? or Constant?