Farmland Rental Rate Briefing Ag Lender Day Lamberton August 12 th , 2014 David Bau

1. Farmland Rental Rate Briefing Ag Lender Day Lamberton August 12th, 2014 David Bau Extension Educator Agricultural Business Management University of Minnesota Extension bauxx003@umn.edu 507-360-0664

2. TODAY’S AGENDA: • Corn and Soybeans 2014 Outlook • FINBIN DATA • Increasing Input costs • Minnesota Agricultural Statistic Information • Farm Land Rental Rate Trends • Land Values • Current Local Markets

3. 2014 Corn Budget

8. Rents at $230 in forecast example Farmer Keeps: $60 labor charge and $16 net income $76 Total With 178 bushels of corn at $5.00 per bushel

9. What if corn price is $3.25 per bushel? Lower income by $321.50 per acre Now farmer keeps: No Labor Charge: $0 A Loss of $245.50

10. 2014 Soybean Budget

15. Rents at $230 in forecast example Farmer Keeps: $45 labor charge and $5 net income $50 Total With 48 bushels soybeans at $11.50 per bushel

16. What if corn price is $10.00 per bushel? Lower income by $72.00 per acre Now farmer keeps: No Labor Charge: $0 A Loss of $22.00

17. FINBIN DATA

18. www.finbin.umn.edu

21. Increasing Input costs

22. Input Cost Trends Input costs for corn have been increasing at rate of 14.7% for corn since 2003. Input costs for soybeans have increased at a rate of 10.4% per year since 2003.

23. Input Cost Trends If you would apply the 14.7% increase per year to 2012 numbers that would make 2013 total corn input cost direct and overhead expense at $893.09 per acre or $5.02 per bushel at 178 bushels per acre. For 2014 total costs would be $1024.37 per acre or $5.75 per bushel at 178 bushels per acre.

24. Input Cost Trends If you would apply the 10.4% increase per year to 2012 numbers that would make 2013 total soybean input cost direct and overhead expense at $570.77 per acre or $11.89 per bushel at 48 bushels per acre. For 2014 total costs would be $630.13 per acre or $13.13 per bushel at 48 bushels per acre.

25. Input Cost Trends 2014 corn yields of 178 bushels per acre @ $4.50 per bushel is total income of $801 with expense at $1,024.37 per acre would be Net Farm Income of Negative $223.37 per acre. 2014 soybean yields of 48 bushels per acre @ $11.50 per bushel is $552 with expense at $630.13 per acre would be Net Farm Income of Negative $78.13.

26. August 8, 2014

27. August 8, 2014

28. Corn Cash Rental PaymentAfter $664 per acre expenses including $70 labor charge($824-$230 +$70= $664) Yield Per Acre

29. Minnesota Agricultural Statistic Rental Information

30. Minnesota Cropland and Pasture Rental Rates Data provided by the Minnesota Agricultural Statistic Service September 2012, 2011 and 2010 and May 2009 NASS.USDA.GOV Cropland Rental Rates Pasture Rental Rates

31. Minnesota Cropland and Pasture Rental Rates Data provided by the Minnesota Agricultural Statistic Service September 2011 and 2010 and May 2009 Cropland Rental Rates Pasture Rental Rates Irrigated **Minnesota average cropland rent in 2014 $185 increased 4.5% Down from 18% previous year and 11.1% increase in 2012 Pasture average in 2014 $26 declined 7%

32. Farm Land Rental Rate Trends

33. Average Cropland Rental Ratespaid in Adult Farm Management FINBIN database. Calculated 2014 based on FINBIN rents increased 4.5 percent from 2013 to 2013 multiplied by 2013 rates to estimate to determine 2014 rental rates

36. Land Values

37. Corn and Soybeans County Yields Yields from Minnesota Agricultural Statistic Service Annual Bulletins: 2012, 2011, 2010, 2009. Corn Soybeans

38. SW MINNESOTA COUNTY FARM LAND PRICES 2001-2012 Prepared by David Bau, Jim Nesseth 2002-2003 The amounts listed below are the prices paid per acre for total farmland (not tillable acres) in each listed county. The data is from farm sales recorded from January 1st through June 30th of the respective years. The data includes only bare land sales. No land and building combination sales are included. The information is from actual arms length sales reported to county authorities and collected by personnel of the University of Minnesota Extension. Sales data was not weighted for acres, each sale on a per acre basis was averaged to get the average price paid per acre. In 2005 added counties Chippewa, Lac qui Parle, Redwood and Yellow Medicine to study.

39. December2014

40. November 2014

41. Forty Year Range in Cash Prices Worthington, Minnesota SOYBEANS CORN Prepared by: David Bau – Regional Extension Educator, Agricultural Business Management

42. WORTHINGTON, MN CORN PRICE PROBABILITY Corn Percent of Time Data collected by Erlin Weness and David Bau and prepared by David Bau.

43. WORTHINGTON, MN SOYBEAN PRICE PROBABILITY Soybeans Percent of Time Data collected by Erlin Weness and David Bau and prepared by David

45. Worthington Yearly Average Cash Prices

46. Questions?? http://www.extension.umn.edu/agriculture/business/ 2014 Farm Resource Guide David Bau Regional Extension Educator Agricultural Business Management University of Minnesota Extension bauxx003@umn.edu