River Valley District shares land lease survey results
What is a fair cash cropland lease rental rate? The rapid surge in commodity prices during the past few years has escalated land values and cropland leasing rental rates.
Historically, the Kansas Agricultural Statistics Service has been the key source for annual rental rates change information. However, government cutbacks, discontinued the Kansas Ag. Statistics annual mass survey in 2009. The U.S. Department of Agriculture still publicizes an annual Agriculture Land Values and Cash Rents at http://www.nass.usda.gov/Statistics_by_State/Kansas/index.asp, but local data is limited.
As a result, Kevin Dhuyvetter and Mykel Taylor, K-State Extension economists, began publishing an annual “projected going rates” for farmland and rental rates. The latest “2012 Kansas County-Level Land Values and Cash Rents for Non-Irrigated Cropland and Pasture” and the K-State Farm Management publication, MF-1100 “Kansas Land Prices and Cash Rental Prices” are now available at www.agmanager.info.
In the fall of 2012, the K-State Research and Extension–River Valley District conducted a leasing survey with 166 random rural River Valley residents. Then, survey responses were compiled from these local surveys with a 37 percent response rate. A potential limitation to these surveys is that they do not reveal the year in which a rental rate being reported was negotiated. Therefore, if a contract between a landowner and tenant was negotiated five years ago; the rate may be low causing a wide range in reported values. Also, the survey does not reveal the quality of land, parcel size, land technology, productivity and other demand factors.
Dryland rental rates response (ranges and averages) were as follows:
Clay County, $40 to $105, average of $72 per acre;
Cloud County, $50 to $100, average of $63 per acre;
Republic County, $45 to $95, average of $76 per acre; and
Washington County, $40 to $140, average of $78 per acre.
Irrigated rental rates response (ranges and averages) were as follows:
Clay County, $150 to $250, average $200 per acre;
Cloud County, $150 to $180, average $165 per acre;
Republic County, $20 to $275, average $233 per acre; and
Washington County, $60 to $125, average $ 91 per acre.
Mykel Taylor, K-State Extension economist, says that historical returns (rent to value percentages) have been 5 percent for dryland and 7 percent for irrigated acres. The 2012 rent to value increases were 3 percent for dryland and 4 percent for irrigated. This correlates with a 14 percent rental rate increase in 2011, and a 12 percent increase in rental rates for 2010. Overall, rental rates may still seem low compared to current land values dramatically increasing in the past four to five years, but land sales have sometimes been limited.
More information and River Valley leasing slides are available at www.rivervalley.ksu.edu or through the K-State Research and Extension–River Valley District offices in Belleville at 785-527-5084; Clay Center at 785-632-5335; Concordia at 785-243-8185 or Washington at 785-325-2121.