Despite the tough farm economy and all of the uncertainty around trade issues, cash rented farmland still has a steep price in much of the Corn Belt. If you’re unable to negotiate those prices down, how do you know it’s time to walk away?
According to Brent Gloy, a farmer and former agriculture economist at Purdue University, cash rents are expensive right now and negotiating lower isn’t always an option.
“It’s a tough one. I'll tell you from my own personal experience, we let a farm go that we’ve rented for 20 plus years,” he told AgriTalk host Tyne Morgan. “It was good farm, but the price expectations were just at the point where it just didn't make sense to, to continue to operate it.”
If you’re unable to get rents to an affordable level, it’s time to consider walking away. Gloy recommends farmers consider land quality, yield and market opportunities when thinking about letting go of land.
“You got to kind of look at it and say, ‘okay, what, you know, what kind of yield I have to have? What kind of price going to have to have to make this be a good deal?’” he said.
If you weigh those factors and the odds are against the scenario working out it might time to move on.
“In our case, we were looking at a situation where we had to produce outstanding yields and had to sell that crop at a pretty high price to make to make it work and I just didn't think the odds of doing that year in and year out where that great,” he explained. “It varies for everybody, but in our case, it wasn’t a big hit on our acreage so that that helped.”
Unfortunately, Gloy doesn’t expect significant changes in the cash rented farmland market the remainder of the year.
“Right now, farmers still continue to bid pretty aggressively for land,” he said. “I think banks are going to continue to start questioning that, and I think some of the farmers are gonna start to question the logic of that as well. So, I think there's gonna be a softer tone to it, but I don't see big changes, no.”