Farmland Rent Question

[David Arney]

I've seen a few threads on how to price out rent for residential properties, anybody know anything about estimating rent price on prime farmland?

Got about 2,000 acres in NW Missouri Top Prime Farmland currently pulling $100/acre through a 5 year contract set to expire at the end of the year. Land value has spiked recently, due to larger demand for corn. Land value is set to be re-appraised by the state this year, we are expecting the value to be well into the $3-4k/acre price range.

To do a simple math if I wanted 9% return I'd have to ask for >$300/acre to rent it out to local farmers. Got an offer last summer of $185/acre for 5 years, but values have gone up since then, so I'm thinking we can maybe ask for >$200/acre. We've thought about having an auction and taking highest bidder, didn't know if that was a better idea or not.

This farmland you expect Corn to yield 150-200 bushel/acre, and you are probably grossing $750-$800/acre.

well splitting up in 3rds you could ask $250/acre to rent, it'll cost $250/acre to plant seed/fertilizer and everything else, giving the renter projected $250/acre profit.

$250/acre on $3000 acre land is 8 1/3 % interest, didn't know if that number is considered good in this part of the country (NW MO). Land is paid for, there are no notes going to the bank. Property taxes aren't much, but since things are going to be re-appraised by the state this year, they are going to increase.

Any thoughts? Maybe the Kansas City Crews around here know a little bit about cash-renting farmland around here

[Timothy W.]

Hmmm...that's better than we did renting Missouri pasture to dairy farmers.... Then again, land there isn't tillable.

I did some claims on crop losses and the best source of all information related to crops and land was always the local grainery. They just knew everything I ever needed to know to settle insurance claims so I'm sure they will have your info.

As an aside, don't overlook the fact that in addition to leasing the tillable land, you can lease hunting rights seperately, and usually your farmers don't mind a little hunting of the corn munchers one bit. Deer that live around cornfields are known to have a much higher meat quality due to the corn they eat and Missouri is a turkey mecca.