Farm rents in the U.S. will plunge by more than one-third, lenders believe, in a reflection of the falling crop prices which have extended into 2015 a fall in land values which began in late 2013. Bank chief executives in major U.S. agricultural states surveyed by Creighton University expected, on average, that cash rents this year will fall “significantly” to $214 per acre, from $254 per acre last year.
The finding comes amid a weaker period for farm profits spurred by lower crop prices, with the US Department of Agriculture estimating that overall domestic net farm income last year fell 25% to $97.3bn. And it reflects a continued fall in prices of US farmland too, with Creighton estimating that values will fall in January for a 14th successive month.
“Cash rents are down $25-50 per acre in some cases,” James Brown, chief executive of Hardin County Savings Bank in Eldora, Iowa, told the survey. As for values of land itself, the Creighton data indicated a reading of 39.4 this month for an index of price growth, up from December’s 38.6, but remaining below the 50.0 which indicates a neutral market. “Much weaker crop prices continue to take air out of the bubble in agricultural land prices,” said Ernie Goss, the Creighton economics professor in charge of the survey.