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

    Rice Market: Technical Indicators Remain in “Sell” Mode10-24

    Rice Crop: Harvest Nearly Complete, Ratoon Harvest to Start Soon10-24

    Rose on Cotton: Increased Export Competition with India10-24

    Grain TV: Unable to Sustain Yesterday’s Gains10-24

    DTN Livestock Close: Cattle Futures Move Lower10-24

    Doane Cotton Close: Strong Stock Market Keeps Prices Up10-24

    AFB Grain-Soybean Close: Markets Decline Across the Board10-24

    AFB Cotton Close: Higher in Middle of Day’s Range10-24

    AFB Rice Close: Nearby Contracts Slightly Higher10-24

    DTN Cotton Close: Jumps Ahead as Volume Improves10-24

    DTN Grain Close: Markets Pull Back, End Week Higher10-24

    Cleveland on Cotton: Market Keeps Spinning the Same Record10-24

    USDA: Peanut Price Highlights10-24

    Georgia Pecans: Very Light Deliveries, Season Still Running Late10-24

    Soybean Cyst Nematodes: Soil Sampling, Resistant Varieties Are the Best Defense – DTN10-24

    Farm Finances: Prepare Now for Rising Interest Rates – DTN10-24

    Mississippi Pumpkins: Heavy Rains Damaged Crop, Delayed Harvest10-24

    DTN Livestock Midday: Live Cattle Futures Turn Lower10-24

    Louisiana Soybeans: Headed for Another Record Year10-24

    DTN Grain Midday: Corn, Soybeans Move Lower10-24

    Dried Distillers Grains Eyed as Fish Food — DTN10-24

    DTN Cotton Open: Slightly Higher on Light Volume10-24

    DTN Livestock Open: Cash Cattle Values Surge10-24

    DTN Grain Open: Futures Extend Gains10-24

    Keith Good: EPA’s Water Rule Approved by Internal Review Board10-24

    Grain TV: Soybean Exports Double Expectations10-23

    Livestock: Country Of Origin Labeling Debate Marches On – DTN10-23

    Small Scale Organic Farming a Good Way to Branch into Ag – DTN10-23

    U.S. Grain Transportation: Higher Soybean Shipment Boosts Inspections10-23

    Advances in Farming Technology Continue to Aid Mother Nature — DTN10-23

    Ethanol Production Profits Hit the Wall — Why Did it Happen?10-23

    U.S. Energy: Crude Exports, Re-Exports Continue to Rise10-23

    Gasoline Prices: Show 9-Cent Decrease10-23

    Propane Stocks: Increase by 0.2M Barrels10-23

    Diesel Prices: Average Drops 4 Cents10-23

    Alabama: Recent Weather Radar Oddity Was Mayfly Swarm10-22

    Soybean Harvest: Prioritize Shatter-Prone Fields – DTN10-22

    Ethanol: Court Tosses E15 Labeling Lawsuit – DTN10-22

    Georgia: 2 Counties Declared Natural Disaster Areas10-22

    Arkansas: 2 Counties Designated Natural Disaster Areas10-22

    AgFax Grain Review: More Lawsuits Against Syngenta; Harvest Well Behind Pace10-22

    2 Families, 2 Approaches to Building Ranch Tourism — DTN10-22

    Don’t Just Piggy-Back on Others’ Prices in Ag Commodity Markets10-22

    National Cotton Council Commends Timely APH Announcement10-22

    Wheat Growers to Seek Inclusion in APH Yield Exclusion for 2015 – DTN10-21

    Farm Shop Dream Requires Thoughtful Planning – DTN10-21

    USDA: Weekly National Peanut Prices10-21

    USDA to Implement APH Yield Exclusion for 2015 Spring Crops10-21

    Arkansas: USA Rice Outlook Conference Set Dec. 7-9 in Little Rock10-21

    AgFax Cotton Review: Lower Acres May Close Mill; Australia Acres Up10-21

    DTN Fertilizer Trends: High Costs May Alter Growers’ Tactics for 201510-21

    Herbicide Resistant Weed Summit’s Slides, Webcast Available Online10-20

    Rice and Sugar: Thailand’s Quest for World Domination10-20

    AgFax Peanut Review: NM Down 6M Pounds as State Celebrates 100 Year Crop10-20

    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