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Farmland Value, Cash Rent and Crop Input Outlook 2014
From Sam Custer
OSU Extension, Darke County

Cropland values in Ohio have increased again in 2013. Data from the Oho Ag Statistics Service shows an increase of 12% for bare cropland in Ohio for 2013.

The Ohio Cropland Values and Cash Rents Survey (AEDE) conducted in January 2013 shows that the increase in value of Western Ohio cropland in 2013 would be 6.8 to 15.4% depending on region and land class. The Chicago Federal Reserve Bank and Purdue University both conducted land value surveys in 2013. The Chicago Fed survey (October 1) of bankers found Indiana land values of “good” farmland increased by 18% year-over-year (the entire 7th Fed District increased 14%) while Purdue (June 30) found that the Indiana statewide annual increase in cropland values ranged from 14.7 to 19.1% depending on the productivity of the farmland.

Barry Ward and Peggy Hall, Assistant Professors with The Ohio State University, will address the following topics at our Farmland Leasing Workshop to be held at Franklin Monroe Local Schools on January 15, 2014 at 5:30 p.m., dinner and materials will be included. Pre-registration and pre-payment are required. $20 per person. Registration deadline is January 8, 2014. You can download the registration at http://go.osu.edu/Farmlandleasing.

From flex to cash rent: farmland leasing options

Factors affecting leasing options and rates

Evaluating cash rent survey data

Legal issues in farmland leasing

Analyzing good and bad leasing practices

Developing a written lease for your farm

Crop profitability prospects were positive in 2013 as they have been for the most part since 2007. Profit margins in 2013 are projected to be positive as high yields should compensate for lower prices in most regions of Ohio.

This past seven year period has been one of the most profitable periods in the last 50 years of crop production. These profit streams and healthier balance sheets have led many farmers to seek an investment option for these profits and many have chosen to invest in land. Investors outside of agriculture have also been actively seeking farmland as an investment alternative.

With many dollars and buyers chasing farmland, it isn’t a surprise to see land values increase again substantially in 2013. Crop profitability along with low interest rates have been the primary drivers of this run-up in cropland values. The relative scarcity of farmland has been a contributing factor in increasing cropland values.

So all of this begs the question, “Where are land prices headed in 2014?” The key factors – crop profitability and interest rates – both show indications of “unfriendly” moves in 2014. Crop profits are projected to be lower (possibly negative) and interest rates have moved higher since last year. Does this mean land values will decline?

The projected numbers for 2014 point towards flat to lower cropland values for 2014. Projected budgets for Ohio’s primary crops for 2014 show the potential for little to no profits (possibly losses). The Federal Reserve has indicated that it plans to maintain current low interest rates through mid-2015 although mortgage rates have moved higher.

Returns to Land (Gross Revenue minus all costs except land cost) are projected to be $12-$213/acre for Ohio Corn in 2014 depending on the land production capabilities. Budget projections for 2014 soybeans show returns to land to be $62-$248. Wheat budget projections for 2014 find returns to land to be between $25 and $159 per acre. This is assuming current prices of inputs and present December, November and September 2014 futures prices, respectively. These projections are based on OSU Extension Ohio Crop Enterprise Budgets available online at: http://aede.osu.edu/research/osu-farm-management/enterprise-budgets

For more information about OSU Extension, Darke County, visit the Darke County OSU Extension web site at www.darke.osu.edu, the OSU Extension Darke County Facebook page or contact Sam Custer, at 937.548.5215.

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