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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.
To
see attached flyer, click here
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