Thursday, April 12, 2012

Louisiana: Ag Land Rents Increase with Commodity Prices

AgFax.Com - Your Online Ag News Source


High commodity prices benefit farmers, but they could be driving up rents farmers pay for land. Farmers in some areas of Louisiana are seeing land rents increase dramatically, according to Kurt Guidry, LSU AgCenter economist, and this could hurt their bottom line and affect production decisions.

“Naturally, a landlord will see those high commodity prices and think he has to have his cash rents increased to have his percentage of gross revenue remain roughly the same,” he said.

But, Guidry said, this isn’t necessarily a fair assessment. Farmers have seen steep increases in the costs of fuel, fertilizer and seeds.

“Even though commodity prices have increased and gross revenue has increased, it’s costing a lot more to get to that gross revenue. So, from a producer’s standpoint, basing rent on gross revenue could lead to financial difficulties for that producer,” Guidry said.

What a landowner may charge in rent can vary widely. Guidry said local supply and demand for agricultural land in the area will be a driving force for what a producer has to pay and what a landowner will receive.

The economist said rent could account for 10 to 15 percent of a farmer’s total production costs – higher on more valuable land.

“Land rents are unique to the land. Each piece of property has different production capabilities,” Guidry said.

Many farmers have share-rental agreements, where landowners get a share of the value of the crop as payment. But, Guidry sees more landowners moving to cash rental arrangements, which set a fixed price.

He said landowners want a more fixed income stream. Moving from a share to a cash rent agreement does that for them. But, this is leading to high fixed rents, which may not be fair to farmers if commodity prices drop, production costs are up and yields are down.

Guidry said farmers could consider a payment method he called a share of expected net return.




“In that case what you would do is estimate gross revenue for that piece of property for growing that commodity. Then you would estimate the costs of growing that commodity and figure out what you have left over. This leftover would be shared between the landlord and the producer in terms of cash rent,” Guidry said.

Producers also should be aware of comparable land rents in their area.

Guidry said farmers should get a long-term rental agreement. But the costs in the agreement should be revisited each year and take into account five- to 10-year averages for commodity prices, yield fluctuations and changes in government farm policies.


Tags: , , ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    DTN Cotton Open: Tumbles to Five-Session Low9-2

    South Carolina: Crop Production Field Day Set Sept. 25 at Blackville9-2

    DTN Livestock Open: Cattle Futures Starting with Firm Undertone9-2

    DTN Grain Open: Higher on Light Buying Interest9-2

    Keith Good: Rail Service Problems Persist; Hog Prices Rebounding9-2

    Texas Cotton Industry Mourns The Death Of Economist Carl Anderson9-1

    Livestock: Market Lessons from 4-H County Fairs – DTN9-1

    China Cotton: Reserves’ Quantity, Quality Cause Problems – DTN9-1

    Welch on Wheat: Spring Wheat Harvest Running 22% Behind9-1

    Welch on Grain: Corn Condition Improves, Well Above Average9-1

    Flint on Crops: Rain Is Better Than Well Water9-1

    Rose on Cotton: Plenty of Gaps and No Rallies Expected8-29

    Peanut Harvest In N. Fla.; Drought Pushes Digging In Lower SE – AgFax8-29

    Rice Crop: Looking for a Normal Crop, Not a Bumper8-29

    Rice Market: Being Short Tricky but Being Long Takes Patience8-29

    Peanut Stocks and Processing: Utilization Up 2%, Stocks at 1.9B lbs8-29

    Cleveland on Cotton: Chinese Demand Pulling Prices Higher8-29

    DTN Livestock Close: Cattle Futures Sharply Higher on Positive Cash News8-29

    Doane Cotton Close: Futures Unable to Recover Losses8-29

    DTN Cotton Close: Late Rally Leaves Dec. Flat8-29

    AFB Grain-Soybean Close: Modest Losses Across the Board8-29

    AFB Cotton Close: Dec. Moves Fractionally Lower8-29

    AFB Rice Close: Futures Chart New Leg Down8-29

    Farm Bill: Cotton Transition Assistance Enrollment Now Open8-29

    Are USDA Corn Yield Forecasts Getting Better or Worse Over Time?8-29

    DTN Grain Close: Markets Settle Lower Ahead of 3 Day Weekend8-29

    USDA: Peanut Price Highlights8-29

    DTN Livestock Midday: Hog Futures Surge Higher8-29

    Farmers with Foreign Assets Face New IRS Rules and Serious Penalties8-29

    DTN Grain Midday: All 3 Markets Slide Lower8-29

    Mississippi Outdoors: Beaver Management Not a Simple Issue8-29

    Arkansas: Flood Damage to Crops Valued at $35.6M8-29

    Delta Soybean Yields Start Strong; Sugarcane Aphid Marches On – AgFax8-29

    California: Pinnacle Announces Acquisition of Kerman Ag Resources8-29

    Midwest Farm Lenders Expect Solid Output; Lower Farm Income – Federal Reserve8-29

    Farm Payments to Stakeholders Rise as Gov. Payments Decline – USDA8-29

    Young Farmer in Your Future? – Helping Him or Her is Key to Success. – DTN8-29

    Net Farm Income Forecast to Fall,10.6% Decline Crop Value – USDA8-29

    Alabama: Pesticide Clean Days, Sept. 3-48-28

    Oklahoma: Fall Cotton Tour, Hydro, Sept. 118-28

    Rice Harvest Eases Into Gear In Midsouth – AgFax8-28

    Farm Drones Under Scrutiny: Farmers Impatient for FAA Ruling – DTN8-28

    USDA Readies Dairy Program, Producers Able to Sign Up Tuesday – DTN8-28

    U.S. Grain Transportation: Inspections Continue to Increase8-28

    Farm Program Decisions Hinge on Uncertain 2014 Crop Prices8-28

    Raindrops Keep Falling on Heads of Many Midwest Farmers — DTN8-28

    Economist: Big Potential in China for U.S. Corn, Livestock Exports8-28

    John Deere Lays Off 460 from Waterloo, Iowa Factory8-28

    U.S. Energy: Retail Gas Prices Follow Crude Prices Lower8-28

    Gasoline Prices: Decline by 2 Cents8-28

    Propane Stocks: Up to 74.7M Barrels8-28

    Diesel Prices: Average Drops a Penny8-28

    Sugarcane Aphid In Grain Sorghum: Florida, Georgia Find Infestations8-27

    Cotton – Midsouth – Bolls Opening, Early Defoliation Nears – AgFax8-27

    Midwest Corn and Soybeans Need Warm, Clear September – AgFax8-27

    Cotton – Southeast – More Open Bolls, Lingering Pests – AgFax8-27

    Farm Groups Map Waters to Block Clean Water Act Changes – DTN8-27

    Texas: 2 More Counties Make Natural Disaster List8-27

    Southwest May Face ‘Megadrought’ This Century, Say Scientists8-27

    China’s Citizenship Reform Should Benefit Farmers — DTN8-27

    What Can We Learn about Corn, Soybean Yields from Crop Tours?8-27

    Consider Sulfur for Your Fertility Plans This Fall — DTN8-27

    Rough Rice: Stocks Down 13 Percent from August 2013 — USDA8-27

    South Carolina: Peanut Field Day, Blackville, Sept. 48-27

    Sunbelt Ag Events

    Rice News

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney