Farmland value continues to rise

Many farmers raise crops on ground that they rent from other people. Before they plant the next crop, they negotiate the land rental rate for the coming year. Some agreements are done annually but often they may be established for several years. Some landowners value the relationship they have established with a farmer over the years and are grateful the farmer has taken care of their investment. In these situations, the rental rate is often based on the going rate or slightly below, but may also consider whether the farmer has had a good or poor crop year. In other situations, the landowner will rent to the farmer that is willing to pay the most. Several farmers may want to rent a certain piece of ground because of its proximity to their home operation, its production potential, or the desire the expand their operations. In these cases, rental rates are often higher than the going rate for an area. To assist in determining the going rate, The Ohio State University Extension with assistance from the university's Department of Agricultural, Environmental, and Development Economics complete an annual survey to estimate current and future trends of cropland values and cash rents. The results of this survey are available to the public and can be found at https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents Surveys were completed by 190 individuals who were knowledgeable about cropland values and rental rates such as farm managers, rural appraisers, agricultural lenders, OSU Extension educators, farmers, landowners and Farm Service Agency personnel. Individuals were asked to estimate current bare cropland values and cash rents negotiated in the current or recent year for three production classes of land in their area: Average, Top, and Bottom. Surveyed individuals provided yield estimates based on a five-year period using typical farming practices. The surveys were completed in early 2023. The survey revealed that western Ohio cropland values and cash rental rates were projected to increase 6.1% to 10.7% in 2023, depending on the region and land class. Cash rents were also expected to increase from 5.0% to 6.7%. Increased value of land was influenced by large yields and strong grain prices received by farmers for the 2021 and 2022 crops. However, increase loan interest rates and lower grain prices may begin to affect these land prices and cash rents in the future. Survey results are not available for an individual county, but by region. Hancock and its surrounding counties are part of the twenty-two counties included in the Northwest Ohio section. Survey results showed that the Average category land in northwestern Ohio had an estimated mean yield of 180.1 bushels per acre for corn and 55.9 bushels per acre for soybeans. Top cropland had an estimated corn yield average of 216.4 bushels per acre and 67.9 bushels for soybeans. Land in the Bottom category had an average yield of 147.9 bushels for corn and 42.5 bushels for soybeans. The parameters for yield in all categories were larger in 2023 for soybean and corn compared to 2022, except the Top category for corn yield. Survey results showed that cropland that is considered in the Average category was valued at $8,781 per acre in 2022. It is expected to be valued at $9,529 in 2023, a projected increase of 8.5%. Rental rates in 2022 for Average land was estimated to be $205 per acre, and was projected to be $218 in 2023, an increase of 6.4%. For the Top cropland category, the survey showed an average price in 2022 was $10,943 per acre. The same land was projected to be valued at $12,112 per acre in 2023, a 10.7% increase. Land rental rate average for Top cropland was $256 per acre in 2022 and was expected to be $270 in 2023, an increase of 5.4%. Survey showed a projected rise of 9.0% in land prices in 2023 compared to 2022 for Bottom performing land. Survey value of Bottom land in 2022 was $6,687 and was projected to be $7,286 in 2023. Land rental rate for Bottom land was $153 per acre in 2022 and was expected to be $164 in 2023, a 2.3% increase. This survey is only one tool an individual may use to establish a price agreement for farmland sales and rental rates. Markets are often localized and based on many factors that a survey cannot measure. Other sources for average cash rental rates may be found in the Ohio State University Crop Budgets and the National Agricultural Statistics Services; however, these may be state averages. The cash rental rate should be available upon request for public owned farmland that is leased by a city or county government. Lentz is agriculture and natural resources educator with Ohio State Extension Office — Hancock County.