Ohio cropland and cash rents are anticipated to level off in 2009, and in some cases, decline slightly, according to results of the Ohio State University (OSU) Extension 2009 Ohio Cropland Values and Cash Rents Survey.
"High commodity prices and relatively low input costs drove up profits in 2007 and 2008, but this year is not the case. We are unlikely to see those profit margins in 2009," says Barry Ward, an Ohio State University Extension economist and production business management leader. "That's going to put producers in a tough spot. Will they have made enough money in the last two years to weather the storm in 2009?"
According to the survey, produced by university economists within the Department of Agricultural, Environmental and Development Economics, Ohio cropland values are expected to decrease by 2.4-4.9%, while cash rents may level off or decrease slightly by 0.24%. In some cases, depending on the region and land productivity, cash rents could increase 1.24%.
Ward says that falling commodity prices, coupled with high input costs, are driving the potential declines, and the situation isn't likely to change much in 2010.
"Input costs are lagging commodity prices and both producers and landowners are now in a squeeze," says Ward.
- He said that farmers have a few options to help alleviate some of the financial pressures:
- Pay rents as they come due and cut back costs in other areas, such as new equipment or equipment upgrades.
- Work with the landowner to renegotiate the rent to a lower price for the remainder of the lease term.
- Work with the landowner to renegotiate to a flexible cash rental, where the rent flexes with the market. "This option gives producers some cushion if events or prices moved against them from the time the rent was negotiated initially," says Ward.
The Ohio Cropland Values and Cash Rents survey is conducted annually and draws on the expertise of farm managers, rural appraisers, agricultural lenders, OSU Extension educators, farmers and Farm Service Agency personnel. The results aid producers and landowners with purchase and rental decisions.
Some results of the 2009 survey include:
- Top-producing cropland in Ohio is expected to be valued at $5,007/acre in 2009. In 2008, the land was valued at $5,131. The land is expected to rent for an average of $165/acre this year. Top-performing cropland in Ohio averages 180.7 bu./acre of corn. Average soybean yield is 56.47 bu./acre.
- Average-producing cropland in Ohio is expected to be valued at $4,126/acre this year, down from $4,257/acre last year. The land is expected to rent for an average of $128/acre. Average-performing cropland in Ohio averages 146.3 bu./acre of corn. Average soybean yield is 44.34 bu.
- Poor-producing cropland in Ohio is expected to be valued at $3,131/acre this year, down from $3,292 in 2008. The land is expected to rent for an average of $92/acre. Poor-performing cropland in Ohio averages 111.7 bu./acre of corn. Average soybean yield is 32.51 bu.
Ward estimates that over 50% of Ohio's cropland is rented. Of that, 75% is locked in cash rents.