Have Land Values and Cash Rents Finally Stabilized?

8th federal reserve district

The Federal Reserve branch located in St. Louis representing the 8th Federal Reserve District, recently published the results of its quarterly survey on agricultural credit conditions and general financial status for the 2nd quarter of 2014.

Quality Farm Land:

Overall, quality farm land values appear to have leveled off, or declined slightly, with a current value per acre of farmland across the 8th district of $5,473/acre.  The survey shows land down modestly (0.5%) from quarter 1 of 2014 and down 3.5% from where land values were in the 2nd quarter of 2013.  A large share of survey respondents expect quality farm ground to continue to decline in price over the remainder of 2014.

Pastureland:

The 2nd quarter 2014 survey found the average sales price of pastureland across the district to be $2,313/acre.  This price is down 7.5% from quarter 1 of 2014 and down 2.5% from the 2nd quarter of 2013.  Like quality farm ground, expectations form survey respondents are that pastureland will decline further in the next quarter of 2014.

Cash Rents:

Despite the modest drop in the sales price of quality farm ground, cash rents increased from quarter 1 to quarter 2 of 2014 by 4.8% yielding an average rental rate of $191/acre.  At the same, time rent for pasture land fell modestly from $62/acre to $59/acre.  Overall, cash rental rates for the 2nd quarter of 2014 were higher than rental rates during the same period a year ago for quality farm ground, and slightly higher for pasture ground in the 2nd quarter of 2014 relative to the 2nd quarter of 2013.

There appears to be no consensus among those surveyed as to the direction of cash rental rates on quality farm ground for the remaining quarters of 2014. However, most believe that rental rates for pastureland will increase overall in the coming months.

 

 

Cash Rental Rates

Cash rental rates have trended upward throughout Mississippi in all four geographic/soil regions while share rental rates have remained relatively constant.  However, cash rental agreements have become more common relative to share contracts as the number of share contracts have dwindled according to surveys conducted by Mississippi State.

Rental rates for corn producers have seen rate increases of around 25% since 2008 with the exception of the Hills Region which was about the same in 2012 as in 2008. Soybean producers have seen more modest increases in cash rental rates during the same period with the exception of the lower delta with a rate increase of 21%. Generally cotton producers are paying higher rental rates as well, especially in the hills region where rates were 75% higher than those in 2008.

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent Corn—–

Upper Delta

80.80

97.44

83.43

89.32

87.36

101.04

97.94

115.79

Lower Delta

70.19

89.23

85.73

95.95

116.82

111.19

112.31

118.46

Loam/ Lower Coastal

65.80

74.38

54.06

47.84

62.06

54.38

49.71

60.23

Hills Region

36.00

49.16

34.46

56.38

39.63

44.72

56.81

55.01

——% Share Rent   Corn——

Upper Delta

21.8

.

26.5

.

24.0

.

24.0

.

Lower Delta

.

20.0

25.0

20.0

23.3

.

20.0

20.0

Loam/ Lower Coastal

25.0

20.0

18.8

16.7

20.0

20.0

20.0

25.0

Hills Region

22.1

25.2

23.3

23.8

23.3

20.0

21.7

22.1

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent Soy—–

Upper Delta

61.60

62.80

63.04

73.04

77.08

89.44

92.69

70.27

Lower Delta

58.87

69.36

77.58

80.62

90.34

91.94

78.06

97.62

Loam/ Lower Coastal

43.43

58.25

50.45

50.25

45.74

55.16

56.42

54.00

Hills Region

37.37

28.75

34.28

39.44

37.55

41.42

36.11

41.42

——% Share Rent   Soy——

Upper Delta

25

25

25

22

25

25

25

25

Lower Delta

.

.

.

25

25

23

20

25

Loam/ Lower Coastal

24

23

24

20

20

20

23

21

Hills Region

22

24

23

22

23

34

22

20

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent   Cotton—–

Upper Delta

85.96

97.44

79.68

94.46

85.36

93.33

109.21

105.75

Lower Delta

83.41

89.23

88.88

100.00

106.84

106.95

116.92

120.62

Loam/ Lower Coastal

71.93

74.38

66.94

75.00

77.50

87.50

89.85

71.25

Hills Region

51.66

49.46

41.42

49.00

42.50

58.57

69.35

85.90

——% Share Rent   Cotton——

Upper Delta

25.00

0.00

21.66

20.00

25.00

22.50

.

23.33

Lower Delta

.

20.00

.

.

20.00

20.00

.

21.66

Loam/ Lower Coastal

23.00

20.00

20.00

22.00

21.11

21.11

21.66

21.66

Hills Region

23.88

25.20

18.85

0.00

25.00

25.00

20.00

20.00

corn cotton and soybeans 7 year

While commodity prices have declined in 2013.  Rental rates and land prices can be slow to react and expectations of higher prices in the future may continue upward pressure on prices or support rates from the previous year.

 

 

Cash/Share Rental Rates in Mississippi

Cash rental rates have trended upward throughout Mississippi in all four geographic/soil regions while share rental rates have remained relatively constant.  However, cash rental agreements have become more common relative to share contracts as the number of share contracts have dwindled according to surveys conducted by Mississippi State.

Rental rates for corn producers have seen rate increases of around 25% since 2008 with the exception of the Hills Region which was about the same in 2012 as in 2008. Soybean producers have seen more modest increases in cash rental rates during the same period with the exception of the lower delta with a rate increase of 21%. Generally cotton producers are paying higher rental rates as well, especially in the hills region where rates were 75% higher than those in 2008.

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent Corn—–

Upper Delta

80.80

97.44

83.43

89.32

87.36

101.04

97.94

115.79

Lower Delta

70.19

89.23

85.73

95.95

116.82

111.19

112.31

118.46

Loam/ Lower Coastal

65.80

74.38

54.06

47.84

62.06

54.38

49.71

60.23

Hills Region

36.00

49.16

34.46

56.38

39.63

44.72

56.81

55.01

——% Share Rent   Corn——

Upper Delta

21.8

.

26.5

.

24.0

.

24.0

.

Lower Delta

.

20.0

25.0

20.0

23.3

.

20.0

20.0

Loam/ Lower Coastal

25.0

20.0

18.8

16.7

20.0

20.0

20.0

25.0

Hills Region

22.1

25.2

23.3

23.8

23.3

20.0

21.7

22.1

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent Soy—–

Upper Delta

61.60

62.80

63.04

73.04

77.08

89.44

92.69

70.27

Lower Delta

58.87

69.36

77.58

80.62

90.34

91.94

78.06

97.62

Loam/ Lower Coastal

43.43

58.25

50.45

50.25

45.74

55.16

56.42

54.00

Hills Region

37.37

28.75

34.28

39.44

37.55

41.42

36.11

41.42

——% Share Rent   Soy——

Upper Delta

25

25

25

22

25

25

25

25

Lower Delta

.

.

.

25

25

23

20

25

Loam/ Lower Coastal

24

23

24

20

20

20

23

21

Hills Region

22

24

23

22

23

34

22

20

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent   Cotton—–

Upper Delta

85.96

97.44

79.68

94.46

85.36

93.33

109.21

105.75

Lower Delta

83.41

89.23

88.88

100.00

106.84

106.95

116.92

120.62

Loam/ Lower Coastal

71.93

74.38

66.94

75.00

77.50

87.50

89.85

71.25

Hills Region

51.66

49.46

41.42

49.00

42.50

58.57

69.35

85.90

——% Share Rent   Cotton——

Upper Delta

25.00

0.00

21.66

20.00

25.00

22.50

.

23.33

Lower Delta

.

20.00

.

.

20.00

20.00

.

21.66

Loam/ Lower Coastal

23.00

20.00

20.00

22.00

21.11

21.11

21.66

21.66

Hills Region

23.88

25.20

18.85

0.00

25.00

25.00

20.00

20.00

corn cotton and soybeans 7 year

While commodity prices have declined in 2013.  Rental rates and land prices can be slow to react and expectations of higher prices in the future may continue upward pressure on prices or support rates from the previous year.