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Agricultural News


New Farm Journal Media Survey Says Many Farmers Prepared to Walk Away From 2016 Land Leases

Tue, 13 Oct 2015 09:23:01 CDT

New Farm Journal Media Survey Says Many Farmers Prepared to Walk Away From 2016 Land Leases
   

A new survey of commercial-scale farmers found 40% may be willing to walk away from their land leases as sinking commodity prices squeeze margins. Some 12% of respondents said they “absolutely will” walk away from a cropland lease “if the rental rate is not lowered,” and another 28% said they “probably will” walk away if they do not receive rent relief.

A survey of more than 500 commercial-scale farmers, 50% of respondents said they will probably renew leases, even if rent stays the same. Ten percent said they "absolutely will not" walk away from a lease.

Respondents are among Farm Journal Media’s Pro Farmer and LandOwner newsletter subscribers from across the U.S. and are representative of individuals who consider farming their primary occupation. The survey was conducted in late September and early October.

"We were somewhat suprised by the number who might terminate a lease. Larger farmers tend to rent a lot of the land they farm, and they work very hard to obtain and protect those landlord relationships over the years," said LandOwner editor Mike Walsten. "This is the first time we have measured the number who are willing to walk away from leases if the owner will not negotiate lower rent. The results clearly show there are strong expectations for lower cash rents."

Nearly 73% of survey respondents expect lower cash rents in 2016, with 42% expecting rent to decline by less than 10%. Only 6% expected cropland rent to decline by 20% or more, and 2% of respondents expect rent to increase.

When it comes to buying and selling farmland, 42% of respondents are interested buyers and only 7% are interested sellers. About 75% expect land sale prices to decline in 2016, with 27% expecting the decline to be 10% or higher.

“The number of quality farm properties available for purchase remains quite low with estate settlement the dominant reason for selling a farm parcel. This speaks to the financial stability in the ag community despite tougher cash flows and farm operator longer-term optimism,” Walsten said. “While demand is somewhat weaker, this lack of forced selling provides some stability for land prices.”

 

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