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Honored Advisor

Re: Strong Cash Rental Auctions In Iowa

We either have a problem of not enough land to go around or too many farmers.  Every farmer that I know would definitely rent more land if given the opportunity, some of the BTOs would trade their soul to satan for all the land in the county.  The "starting out farmers" tend to be a son-of-a BTO that wants to "show the old man up" but will still have use of the old man`s machinery.  If a landlord has known a family since the rail was layed and give the grandson a $200 break on the rent, it`s his land and good for him. Money can be made @ $530 rent but you`ll need a sharper pencil than last yr,  this year`s ins guarantees won`t be as juicy.  Here`s the way to look at it you can lock in $5.30 for fall, 100 bu/acre=your 530 rent and everything above 100 bushel will have to cover the inputs, so there is some reason to this. Money is the bottomline determining factor as to how badly that  someone wants something, water always finds it`s level. Right now if there`s a smell of a farmer retiring he`ll have 30 brown-nosers in his yard until he picks one, then he ends up with 29 that are ticked off with him all of them recalling minute favors they`ve done for him such as hitching up a wagon while he was on the tractor one time. It`s one wonder why the geezers up and turn their land over to a management service and head to Corpus Christi. Most land that comes up for rent goes to a BTO, if a landlord makes `em pay, more power to `em.  BTO definition=someone with 1 more acre than I Smiley Wink

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Senior Advisor

Re: Strong Cash Rental Auctions In Iowa

That is the way true capitalism is supposed to work in that willing sellers and willing buyers come together on terms. The auction format merely invites more people to the fray and a potential for a better result for the seller.

 

One day, when and if you have a machinery auction, you will sell those fine pieces and you won't care if they bring too much. You won't concern yourself if that bidder pays too much or remains solvent after the sale. It's a matter of choice and people that pay rent that is too high only have themselves to blame. Their name is on the lease and nobody forced them to sign.

 

You will hear complaints about land rents next year as you have in the past. But the results of those recent auctions indicated that the complaints have been unfounded. That those greedy landlords were not over charging but gave up income potential to the benefit their tenants. Where are the greedy **bleep** remarks now that we find out that rents have been under priced?

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Senior Contributor

Re: Strong Cash Rental Auctions In Iowa

I threw some numbers in last night to see if a buck could be made. It would take 200 bushel corn and mid $5 corn to turn profit. Very possible, but not guaranteed. Loooked like $50 to $80 per acre was achievable. But drop the price or yield slightly and it gets mighty tight.

I am curious, how many farmers total will farm that 3300 acres now? Was it a few large farmers getting several tracts, or several farmers getting an 80 or 2 each?
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Senior Contributor

Re: Strong Cash Rental Auctions In Iowa

Also, I couldn't fudge numbers enough to make beans work. Is it strictly corn in that area? Or can someone pencil for me 55 or 60 bushel beans at $12 and show a profit please?
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Senior Advisor

Re: Strong Cash Rental Auctions In Iowa

Yes it is tough to get started. It always was for young guys that are cash poor. No matter if corn was $1 or $6. Competition is keen and young people are short on patience. They would like to start out when dad ended up. Running the better equipment on a sizable land base. Not to likely unless you won the powerball or dad and grandpa wants to set you up.

 

My dad retired when he was 72. The same age I am now. I rented his farm for $70 per acre cash rent. The rest of my land was cash rented at $46. Little premium there to get him to quit. 1972 with corn barely over a dollar and beans under $3.

 

With $6 corn those same acres should be rented for $420 and $11 bean ground should be $400 as well.

 

Those that think landowners have such a great thing, try buying $8K to $10K land and see what rent levels you can get for it. $8K land will cost you $500 per acre in interest and taxes if you have a mortgage.

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Senior Advisor

Re: Strong Cash Rental Auctions In Iowa

It's great you feel that way as it shows a great appreciation for landowners and the opportunity they gave you. You have the intention to pass it on to someone that comes after you. Good idea!

 

However that is quite different than the young snot nosed kid that expects a gift and thinks you are a greedy **bleep** if you don't give it to them.

 

My thoughts are directed toward my kids and their kids and of course my lovely bride.  I'm well aware that I may not be on this side of the sod much longer. Our financial security hopefully will add to their financial security. Son has been offered our land but has chosen not to do so, Yet. Maybe after AA' bankruptsy reorganization, farming might look more attractive to him.

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Senior Contributor

Re: Strong Cash Rental Auctions In Iowa

$420 and $400 on dad's land. $276 and $168 on your other rented land. The second set reflects the majority of the rental market today, between $180 to $300.
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Senior Contributor

Re: Strong Cash Rental Auctions In Iowa

Don, The only arguement I would have with you in your post is on a machinery auction, once you sell that tractor, you don't care if the high bidder takes it home and drives it on Sundays or beats the hell out of it. I would think you do care if the high bidder on a rental auction is a good operator who will treat your land the way you want it too...MikeM

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Veteran Contributor

Re: Strong Cash Rental Auctions In Iowa

On the operator side is it good business? It definitely  is on the owner side. To me it just seems that you are setting yourself up for some unneeded stress. If you rent it at auction for two years then the land owner decided that the auction worked really well, two years from now he will do it again and then your back at bidding it up against someone else. In the meantime you have adjusted your work hours, equipment etc. for the added acres and you may lose it in two years. I personally would rather work one on one with the owner to set the price and hope to keep it for a longer term. I would have no problem paying going price, but an auction is a whole different relm. And yes it is getting tough for young guys trying to get in by doing this type of thing. My dad farms, I farm, my dad rents the equipment to me and he has no desire to rent any more land, hence I "try" to rent some more acres. That goes about as far as that. I try to keep the bids at market price and some leverage for profit. The BTOs come in and smoke me right out of the room, That's fine, it's America... You are free to do what you want and just the part of being involved in the ag community now days.

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Senior Advisor

Re: Strong Cash Rental Auctions In Iowa

That is true Mike but many folks like me would reserve the right to reject any or all bids. I wouldn't like to hurt anyones feelings but some folks just won't qualify.

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