Skyrocketing Farm Prices Complicate Rent Relationships
Farm auctioneers are the sound of success in Nebraska. A land sale in February set a Nebraska record at $12,000 an acre for ground near Hastings. That record has now been shattered nine months later at nearly $17,000 an acre for a York County farm.
"It's really just been crazy," said UNL Extension Educator Tim Lemmons.
Harold Brumond put it another way. "Mind boggling. You just can't figure it out."
In 60 years of farming, Brumond's never seen anything like it. As a landlord who rents to a relative, now he's left trying to figure out what to charge.
He explained, "It makes you want to be fair but you want to suit yourself too because you got taxes to pay."
University of Nebraska Extension experts call it a perfect storm. Farmers have made good money and are investing in land.
At the same time, interest rates are low and land is scarce.
As Lemmons said, "They're just not making any more of it."
On average, he said a parcel of ground only comes up for sale only once every 124 years.
"This may be my only opportunity to get a hold of this land, not just for my generation but my son or my daughter that might be coming behind me so we tend to see land values get inflated because of that," he said.
Lemmons and fellow UNL Extension Educator Allan Vyhnalek are traveling the state, putting on workshops.
Some who attended a four hour session in Hastings called themselves "city farmers". They own farm ground, but rent it out.
Vyhnalek said problems arise when landlords only see the dollar signs of what farmers make, not what they spent to grow a crop.
"Greed is a powerful negative emotion that's causing some of our problems here," he said.
In central and south central Nebraska, rent on irrigated crop land averages just under $210 an acre.
Farmers are paying more rent. But the rates are not going up as quickly as land that's up for sale.
Vyhnalek said," That doesn't mean cash rents aren't going up -- clearly they are. Cash rents and land values have more than doubled the last five or six years but cash rent has gone up 12, 18, 20 percent whereas land values are going up 25, 30, 35 percent."
Many landlords make sweetheart deals on rent to keep it in the family. Vyhnalek put himself in that category.
He said, "My tenant is my brother. Well I'm not going to kick my brother off. My brother's going to be the farmer of my ground as long as he wants to be."
Harold Brumond says he wants to be fair with his renter, also in the family, saying he doesn't know how long good times will last.
"Whether there will be a bubble or not. There always has been," he said.
Experts emphasize good relationships. Landlords should be open about the higher taxes they're paying.
And farmers who rent should open their books and talk about how much they're getting at the elevator and also what they spent on fuel and irrigation.