Farmland rental rates keep climbing

As expected, rental rates for farmland continue to rise across North Dakota, with many counties in the state seeing an increase of roughly 5 to 10 percent from a year ago.

The North Dakota field office of the National Agricultural Statistics Service, an arm of the U.S. Department of Agriculture, has released its 2012 County Rents & Values. The widely watched report is used by some farmers and landlords to help determine rental agreements.

USDA surveyed about 2,150 North Dakota agricultural producers in late January.

An Agweek cover story last fall and a subsequent Agweek article early this year both found that rental rates were rising rapidly. Rates have been increasing across the state for several years, reflecting the generally strong crop prices that farmers have enjoyed since 2007.

"We've had the higher prices, and rents have gone up," says Brad Thykeson, a Portland, N.D., farmer and president of the North Dakota Grain Growers Association.

Older farmers, who have endured tough times financially, tend to be more conservative about how much to pay for rent, he says.

Farmers in general need to remember that strong crop prices may not last, he says.

Strong corn prices, in particular, have contributed to higher rental rates, farmers and others in area ag say.

With corn prices high, farmers are willing and able to pay higher rent for farmland on which corn can be grown. Also, new corn varieties allow the crop to be grown in areas where the soil and climate hadn't been suited for corn, putting more upward pressure on rental rates.

USDA estimates that North Dakota farmers will plant a record 3.4 million acres of corn this year, up from 2.2 million acres last year.

Corn and more corn

Here's a sampling of what the newly released USDA survey found:

Richland County, in southeastern North Dakota, had an average rental rate of $114.20 per acre for nonirrigated farmland this year, the highest such rate in the state. The 2012 rate is 9.6 percent higher than the county's average rental rate of $104.20 last year.

Richland County had the state's highest rental rate for nonirrigated this year: $175 per acre.

Corn and soybeans, which also have enjoyed strong prices, are the dominant crops in Richland County. In addition, the county is a leading producer of sugar beets, a high-value crop.

Percentage increases were particularly strong in the south-central part of the state, where rental rates increased an average of 12 percent, according to information from Andy Swenson, farm management specialist with the North Dakota State University Extension Service.

For instance, the average rate in Emmons County was $55.40 per acre of nonirrigated farmland, an increase of 15 percent from the $48.10 per acre last year.

"A lot of it (the increase) is because of corn. More corn is coming into the county," says Todd Lang, president of Strasberg (N.D.) State Bank.

Farmers planted 107,000 acres of corn in Emmons County last year, compared with 67,400 acres in 2010, according to USDA figures.

Strong crop prices in general also contribute to rising farmland rental rates in the county, Lang says.

Planting woes affect rent

Renville County, in northwestern North Dakota, where wet conditions in 2011 prevented many fields from being planted, saw only a marginal increase in rental rates. The average rental rate for nonirrigated farmland was $45.80 per acre, up from $45.50 per acre a year ago.

Last year, less than 10 percent of farmland in the county was planted because of the extremely wet spring, says LoAyne Voigt, county extension agent.

That probably limited the increase in rental rates, she says.

Many fields in the county, though dry on top, remain extremely wet under the surface, which also may have affected how much farmers were willing to pay in rent, she says.

Renville County has very little corn, she notes.

Only 1,900 acres of the crop were planted in 2010, according to USDA.

The average rental rate for nonirrigated farmland in Bowman County, in southwestern North Dakota was $33.30 this year, up 4.7 percent from the $31.80 per acre a year ago.

In 2010, Bowman County had 8,500 corn acres. USDA withheld 2009 corn acreage in the county to avoid disclosing data for individual operations.

The USDA report on farmland rental rates can be found online at www.nass.usda.gov/nd/ . Click on "county rents and values" beneath the "North Dakota publications" box at the bottom on the page.

State-level estimates will be released in a different report Aug 3.