M1195     2008  

Cropland Rental Rates for Minnesota Counties

Gary Hachfeld, Extension Educator, Regional Center Mankato
William Lazarus, University of Minnesota Extension Economist, Farm Management
Dale Nordquist, Rann Loppnow, and Matt Heers, Center for Farm Financial Management

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Introduction

Land rental rates continue to be of interest to landowners and operators. Given the recent volatility in land rents, it is difficult to determine what rents may or should be. This publication provides some historical perspective on rental rates actually paid by a group of farms and trends over the past five years. This information is meant as a guide and starting point. The information and data is not meant to establish, determine, set, fix, or even hint at what actual rents should be. It is simply a reporting of historical land rental rates in Minnesota.

Historical rental data is included for years 2004 through 2008. Average rental rates are listed by county for each year. The 2008 data also includes the median cash rent and the 10 and 90 percentile range.

Because land rental rates have been so volatile recently, there is really no way to statistically project future rental rates. In the 2008 data, average rents increased substantially in most regions of the state. However, rents for this group of farms actually declined in the East Central region (41 farms total) as well as Morrison and Otter Tail counties. The 2009 and 2010 columns are included for you to list your actual 2009 rent and to list your anticipated 2010 rent.

Data Source

The land rental data shown in the data tables is extracted from FINBIN, a database of farm record summaries of over 2,400 Minnesota farms. The farmers participate in the Minnesota State Colleges and Universities (MnSCU) Farm Business Management program as well the Southwestern Minnesota Farm Business Management Association. The rental rates reported are their actual rents paid for the years listed.

Analysis Method

Staff from the Center for Farm Financial Management used FINBIN data to compile the rent database for the years 2004 through 2008.

All row crop acres, small grain acres, canning crop acres, etc. are included in the data analysis. Not included in the analysis are acres allocated to pasture, aftermath grazing, all hay and haylage acres, CRP acres, fallow, and prevented planted acres. All normal farming practices for the regions were included in the analysis.

Data was analyzed by county. Counties with a minimum of 15 farms reporting land rent data are included in the analysis. If a given county does not appear in the data table, there were not enough farms reporting data.

Data Results

The following two pages show the county data arranged in seven regions consistent with the Minnesota Department of Agriculture, Agricultural Statistics Service districts.

Due to insufficient data, the following counties are not included in the survey information:
Aitkin, Anoka, Becker, Beltrami, Carlton, Cass, Chisago, Clearwater, Cook, Crow Wing, Hennepin, Houston, Hubbard, Isanti, Itasca, Kittson, Koochiching, Lake, Lake of the Woods, Meeker, Mille Lacs, Pennington, Pine, Ramsey, Rock, Roseau, Sherburne, St. Louis, Traverse, Wabasha, Wadena, Washington, and Yellow Medicine counties.

Minnesota Cropland Rental Rates Per Acre

Under the 2004-2007 “Average” data columns, there is historical rent data for those four years. The land rental data listed is an average of all the farms reporting land rent for a specific county and year.

Under the 2008 crop year columns, the average rent is listed. The median or 50th percentile is also presented with half of the rent being less than this amount and half the rents being greater than this amount. In addition to these numbers, the 10th and 90th percentile are included to reflect the range of cash rents. Ten percent of the farmers reporting rents paid less than the rent number listed in the 10th percentile column. Similarly, ten percent of the farmers reporting rents paid more than the rent listed in the 90th percentile column.

Again, the 2009 and 2010 columns are for your use in listing your actual 2009 rent rate and for listing what you think may be your 2010 rate using the historical data listed in the tables.

Average Annual Change in Rent 2004-08

Following is a table showing average annual changes in land rental rates for the years 2004 through and including 2008 and the one-year change from 2007 to 2008. The calculations are weighted averages to compensate for differences in acres and rental rates from the various counties in each region. The land rental numbers used to calculate the percent change values are also from FINBIN. They are from the same data set used to calculate the county-level average land rental rates for 2004-2008 shown on the previous pages, but including farms in all counties in each region.

The annual 2007-2008 increase was far greater than the average annual increase over the five year period for most regions of the state. This increase was a response to the overall increase in the price of commodities during this period and the perceived increase in profitability of crop production. This major increase in one year had an impact on the five year average change too. For comparison, the five year average increase from 2003 – 2007 ranged from 1.73% in East Central to 4.93% in the Southeast region.

The percentage figures are not meant to predict future increases but are merely to document how regional rental rates have changed over the years.

Again, please note that even though the land rental numbers shown may not align with rents being bandied around the coffee shop, they are real and actual rent numbers reported by the farmers in farm management education programs throughout Minnesota.

Summary

The land rental rates listed in the data tables are not meant to dictate or determine actual land rental rates. They are simply a listing of the historical land rental data from years 2004-2008 as reported in FINBIN.

Keep in mind that these rental rates include both family and long-term rental contracts. Rental rates between family members are generally lower than those between un-related parties. Long-term rental contracts generally do not change during the length of the contract and therefore may affect the average numbers used in the data calculations.

Those who wish to search FINBIN for land rental data specific to a county or region (assuming there are enough farmers reporting rent values) as well as other farm data can do so by going to www.finbin.umn.edu. Once there, select one of the data categories on the left side of the page for whole farm, crop, or livestock information. Simply select the data you want to retrieve by using the drop-down menus. There are a number of help buttons across the top of the page as well. Once your data choices are selected, click on “Generate Report” and await your results. If a sufficient number of farms meet your criteria, you will receive a report.

The information given in this publication is for educational purposes only. Reference to commercial products or trade names is made with the understanding that no discrimination is intended and no endorsement by University of Minnesota Extension is implied.

Produced by Communication and Educational Technology Services, University of Minnesota Extension.