The world we live in...

[okeefe4prez]

Interesting.

Has the land got so high now that it is out-pricing the mom and pop farmers and those people shifted to custom farming? Are the big companies only able to afford the land now? I seem to have heard of custom farming in the last several years.

My grandma has land in Pokerhontas county that has three guys bidding to get a ground lease each year. I think the costs of equipment are sofaking high that the dudes who can afford it need to sop up every nearby acre that they can possibly handle. You can probably count the "mom and pop farmers" on two hands in some counties. If you ain't got scale you simply can't operate.

 

[Fryowa]

Interesting.

Has the land got so high now that it is out-pricing the mom and pop farmers and those people shifted to custom farming? Are the big companies only able to afford the land now? I seem to have heard of custom farming in the last several years.

Mom and pop farmers can’t afford to buy ground anymore.

Around here you won’t find anything selling for less than $20K right now, so 80 acres would be $1.6M minimum. For scale, a square mile is 640 acres which would be valued at almost $13 million.

The guys/gals buying land here are big time farmers with lots of cash, collateral, and credit.

There’s a reason Bill Gates is buying farm ground like there’s no tomorrow.

 

[Fryowa]

My grandma has land in Pokerhontas county that has three guys bidding to get a ground lease each year. I think the costs of equipment are sofaking high that the dudes who can afford it need to sop up every nearby acre that they can possibly handle. You can probably count the "mom and pop farmers" on two hands in some counties. If you ain't got scale you simply can't operate.

Rent used to just be something mom did when dad died and there weren’t any kids around to farm it. If you had a little extra capacity or couldn’t afford to buy ground you could just rent some to fill out your harvest.

Now rent ground is a commodity that guys fight over, and people have figured out you can make a hell of a living just doing the work and not worry about owning a farm operation. Most of the guys who do it here have trucking companies and cut silage as well, so they can keep 6-8 guys employed year round. It’s wild. Rent prices here have tripled in the past decade, but yields are sky high and grain prices ain’t ever gonna crash again in a world that keeps on adding a billion people every decade.

 

[okeefe4prez]

Rent used to just be something mom did when dad died and there weren’t any kids around to farm it. If you had a little extra capacity or couldn’t afford to buy ground you could just rent some to fill out your harvest.

Now rent ground is a commodity that guys fight over, and people have figured out you can make a hell of a living just doing the work and not worry about owning a farm operation. Most of the guys who do it here have trucking companies and cut silage as well, so they can keep 6-8 guys employed year round. It’s wild. Rent prices here have tripled in the past decade, but yields are sky high and grain prices ain’t ever gonna crash again in a world that keeps on adding a billion people every decade.

And printing a trillion dollars of new currency every year or two helps as well. My dad has managed the ground for years and can't believe how it used to be the owner begging a neighbor to lease it so it generated income to the new world of dudes bidding on the lease.

 

[carneyhawk]

Interesting discussion about the current state of affairs in farming. Gone are the days when a family could eke out a living on 120 or 140 acre farm along with some hogs & cattle. Fryowa is accurate in his description of the ag situation in extreme NW Iowa. Similar to that in virtually the entire state. Not the same land values but certainly the same trends.
I've been retired several years but in the early 2000's I had a customer who was a high level corporate officer of John Deere in Moline. In response to a question I asked him he stated that at that time Deere's target farm customer was an operation with about 2,000 or more acres. I'm sure those numbers have increased dramatically since that time.

It's been a long time since I've heard a farmer utter the old phrase, "live poor, die rich". Most of these folks are eating pretty high on the hog these days.

 

[okeefe4prez]

Interesting discussion about the current state of affairs in farming. Gone are the days when a family could eke out a living on 120 or 140 acre farm along with some hogs & cattle. Fryowa is accurate in his description of the ag situation in extreme NW Iowa. Similar to that in virtually the entire state. Not the same land values but certainly the same trends.
I've been retired several years but in the early 2000's I had a customer who was a high level corporate officer of John Deere in Moline. In response to a question I asked him he stated that at that time Deere's target farm customer was an operation with about 2,000 or more acres. I'm sure those numbers have increased dramatically since that time.

It's been a long time since I've heard a farmer utter the old phrase, "live poor, die rich". Most of these folks are eating pretty high on the hog these days.

I've gotta think most of the guys with farms that size got squeezed out by '85 or so.

 

[HuckFinn]

Rent used to just be something mom did when dad died and there weren’t any kids around to farm it. If you had a little extra capacity or couldn’t afford to buy ground you could just rent some to fill out your harvest.

Now rent ground is a commodity that guys fight over, and people have figured out you can make a hell of a living just doing the work and not worry about owning a farm operation. Most of the guys who do it here have trucking companies and cut silage as well, so they can keep 6-8 guys employed year round. It’s wild. Rent prices here have tripled in the past decade, but yields are sky high and grain prices ain’t ever gonna crash again in a world that keeps on adding a billion people every decade.

What are per acre rents doing these days? Lyon County?

 

[Fryowa]

What are per acre rents doing these days? Lyon County?

$400-450 is what I’m hearing most right now, I know there’s a couple pieces south of Boyden getting $500. Those are adjacent to an existing section that a guy owns but the people won’t sell, so he pays out the ass just because it’s right next to his place. Still makes money.

Upper $400s are pretty common and it’s in the $500s in places. Cheaper as you go south and east obviously. It’s wild.

 

[HawkGold]

What are per acre rents doing these days? Lyon County?

my highest last year in IL was $639

 

[HawkGold]

What is the average size of acres being farmed now for a private farm (small operation), I remember back in the day 80-100 acres was like a taller bar. I was just wondering what these people are now farming with the technology advances and farm ground hoarding. Is 250 acres common?

around here....3000 acres. If you are talking full time non hobby non livestock farms.

 

[HawkGold]

Mom and pop farmers can’t afford to buy ground anymore.

Around here you won’t find anything selling for less than $20K right now, so 80 acres would be $1.6M minimum. For scale, a square mile is 640 acres which would be valued at almost $13 million.

The guys/gals buying land here are big time farmers with lots of cash, collateral, and credit.

There’s a reason Bill Gates is buying farm ground like there’s no tomorrow.

Most farms are bought by family farms if you are talking grain.

 

[HawkGold]

Interesting.

Has the land got so high now that it is out-pricing the mom and pop farmers and those people shifted to custom farming? Are the big companies only able to afford the land now? I seem to have heard of custom farming in the last several years.

Custom farming isn't a big deal in most places. Maybe combining. It's done, just not a huge deal

 

[HawkGold]

Interesting.

Has the land got so high now that it is out-pricing the mom and pop farmers and those people shifted to custom farming? Are the big companies only able to afford the land now? I seem to have heard of custom farming in the last several years.

What has outpriced many people are the changes to cap gains and death taxes. Owners/those getting inheritance can avoid those taxes. Cap gains in part was made to help "little guys" be able to buy assets like land. Now families can hold land forever basically.

 

[HawkGold]

I missed this discussion as I was negotiating leases and dealing with crop insurance. Crop Insurance and disaster type payments have pretty much taken the risk out of farming unless you want to count the difference between making good money and insane money.

Fry, you mentioned Iowa/IL being different. Aside from livestock, how so? Yields, farm size, profits, soil types are nearly identical. IL gets quite a bit more rain than NW Iowa and thus has more drainage issues which I spend a lot of time dealing with.

BTW, some of the best farmland in the state is in SE Iowa, though NW Iowa has higher county averages. We get over 40 inches of rain in EC IL more than a foot more than NW Iowa. Here Drummer soils are a class 2 undrained, but when drained one of the highest. SE Iowa has Pella and Muscatine. Pellas can't really be beat with proper drainage.

I have a class 2 Illinos farm of 360 acres that averaged about 160 bu per acre and 3 years running since improving drainage has averaged low 260s.

 

[Fryowa]

Fry, you mentioned Iowa/IL being different. Aside from livestock, how so? Yields, farm size, profits, soil types are nearly identical.

None of that is true about western Iowa. At all.

There is a reason land is more than double the price here. Because yields and profits are higher, the soil is more fertile, the land is flatter, and the tillable percentage is higher per acre.

 

[Fryowa]

BTW, some of the best farmland in the state is in SE Iowa, though NW Iowa has higher county averages. We get over 40 inches of rain in EC IL more than a foot more than NW Iowa. Here Drummer soils are a class 2 undrained, but when drained one of the highest. SE Iowa has Pella and Muscatine. Pellas can't really be beat with proper drainage.

Precip amounts don’t really mean anything anymore when it comes to corn and beans.

As I’ve mentioned several times here before, crop genetics have solved that problem. Western Iowa has been in extreme/exceptional drought for the better part of a decade yet yields are still setting records every year. That’s not hyperbole

You’re also forgetting that drainage improvement costs a lot of money. A LOT of money, and the larger area you’re talking, the more your returns diminish. Improving yields by say, 10% is more than wiped out by the money spent improving drainage. It’s a net negative dollar-wise. Always has been.

 

[Fryowa]

What has outpriced many people are the changes to cap gains and death taxes. Owners/those getting inheritance can avoid those taxes. Cap gains in part was made to help "little guys" be able to buy assets like land. Now families can hold land forever basically.

False. It’s high prices.

Capital gains effect would be so minuscule as to be statistical noise.

When you’re talking $4 million dollars to buy a quarter section of land, no one without either already having a ton of cash on hand, or enough collateral to get cheap loans, can buy anything.

Capital gains doesn’t have shit to do with deterrence on that kind of money.

Where are you coming up with this stuff? Is Illinois in some kind of time warp?

 

[Fryowa]

my highest last year in IL was $639

Lol.

 

[Seth53]

Mom and pop farmers can’t afford to buy ground anymore.

Around here you won’t find anything selling for less than $20K right now, so 80 acres would be $1.6M minimum. For scale, a square mile is 640 acres which would be valued at almost $13 million.

The guys/gals buying land here are big time farmers with lots of cash, collateral, and credit.

There’s a reason Bill Gates is buying farm ground like there’s no tomorrow.

....and the Chinese....

 

[HawkGold]

None of that is true about western Iowa. At all.

There is a reason land is more than double the price here. Because yields and profits are higher, the soil is more fertile, the land is flatter, and the tillable percentage is higher per acre.

You don't know IL. Livestock is the difference. Land here is quite strong and hits mid 20s.