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Are farmers getting gouged on rent?

Ernie Miska, an Alexandria man who manages farm land for his elderly mother, think farmers are paying too much to rent farmland.

"The farmers are getting the short end of the stick," said the retired truck driver, who manages about 600 tillable acres in Polk County. "Crop prices have come down but rent prices haven't."

John Schmidt, who rents 83 acres to a farmer, wonders if he is getting paid enough.

"I'm in the 10th percentile for payment," said Schmidt, who lives in Douglas County. He wondered if his soil drags down his price. It's sandy loam, with gravelly hills, and the farmer who rents it grows hay on it.

The two were among a group of about 20 who came to the Wednesday, Nov. 15, afternoon session discussing fair rental agreements between farmers and landlords. The audience was mostly landowners. Some came to find out where their prices ranked in the area. Others came to learn the business after the death of the spouse or parent who handled the land rent agreements.

In Douglas County, farmers reported they were paying $129 per acre in 2017, up from $107 last year, according to figures distributed by Extension educator Nathan Hulinsky. Meanwhile, commodity prices have fallen since peaking in 2012, and the futures market indicates that prices will either stay flat or rise slightly.

Next year, according to Farm Services Agency figures, crop prices will likely remain so poor that after expenses, corn growers will only clear $85 per acre with which to pay themselves and land rent. The situation looks better for soybean growers, with $159 per acre left after expenses, but more dire for wheat farmers, who will be left with about $53 per acre for rent and their own pocketbook.

Farmers who own all the land they farm and have little debt can still make a decent living at those prices, depending on how many acres they farm.

Landowners who rent their land to farmers should look at the value of their land and decide what rate of return they would like to see, Hulinsky said. Owners of a $1 million farm might want to sell and invest the money in the stock market and possibly see a 10 percent gain. Hanging onto it might gain them 3 percent from renting to farmers.

Farmland prices have fallen in Minnesota by 2.5 percent since 2014.

Several of those who attended the meeting said they had long, solid relationships with the farmers who rent their land.

Miska, who grew up on a farm, said four farmers rent his mom's land, which lies in different areas.

He said his family realizes the rollicking ride farm prices can take, so when they jumped in 2012, their land rent didn't rise as high. Still, the farmers paid them a bonus during the good years.

Now when times are tough, he said, their land rent doesn't have to come down as far to make it possible for farmers to break even.

It all depends, he said, on what the farmers offer when they next come to talk over land rent.