Cash rents and farmland values still rising

It is estimated that over 50% of the farmland in Hancock County is rented by farmers to raise crops. 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. In addition, since 2022, to reduce farm lease termination conflicts, Ohio law requires landlords to give notice by Sept. 1 to terminate a farm lease. This provides adequate time for the farmer to change post-harvest and end-of-the year investments for the next crop year. To assist in determining the going rate for leases, 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. Surveys were completed by 145 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 quality 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 2025. The survey revealed that Western Ohio cropland values were projected to increase 0.6% to 4.1% in 2025, depending on the region and land class. Cash rents were also expected to increase from 0.9% to 1.9%. Decreasing profit margins continue to put downward pressure on cropland values and cash rents while still reasonable farm equity positions and increasing property taxes continue to support values and rents. Cropland values and cash rents are expected to increase minimally in 2025 although further decreases in crop prices and projected profit margins may put further downward pressure on both cropland values and rents. 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 184.9 bushels per acre for corn and 56.2 bushels per acre for soybeans. Top cropland had an estimated corn yield average of 220.2 bushels per acre and 67.4 bushels for soybeans. Land in the Bottom category had an average yield of 152.6 bushels for corn and 42.3 bushels for soybeans. Survey showed that cropland that is considered in the Average category was valued at $10,755 per acre in 2024. It is expected to be valued at $11,056 in 2025, a projected increase of 2.8%. Rental rates in 2024 for Average land was estimated to be $218 per acre, and was projected to be $222 in 2025, an increase of 1.8%. For the Top cropland category, the survey showed an average price in 2024 was $12,968 per acre. The same land was projected to be valued at $13,493 per acre in 2025, a 4.0% increase. Land rental rate average for Top cropland was $274 per acre in 2024 and was expected to be $278 in 2025, an increase of 1.5%. Survey showed a projected rise of 2.0% in land prices in 2025 compared to 2024 for Bottom performing land. Survey value of Bottom land in 2024 was $8,522 and was projected to be $8,691 in 2025. Land rental rate for Bottom land was $174 per acre in 2024 and was expected to be $176 in 2025, a 1.1% 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. Cropland and cash rents are expected to increase in 2025, but at a much slower rate than in previous years. Farm profitability, property taxes, and investment buyer groups will have an impact on future land values. The full Cropland Value Survey may be found at https://farmoffice.osu.edu/farm-management-tools/farm-management-publications/cash-rents. Ed Lentz is agriculture and natural resources educator with Ohio State University Extension Office — Hancock County.