Monthly Archives: January 2012
Cash Rent Questions
Cash rent questions continue to be the primary question I receive and it’s been hard for me to keep sharing numbers based on the UNL or USDA surveys as I question how useful the surveys alone really are. I caught up with Al Vyhnalek, Extension Educator in Platte Co. during the crop production clinics. Al’s specialty is risk management. He shared the following with me which may be helpful to you as well. This isn’t research-based or based on surveys; it’s based on land productivity and yield potential. But it’s another potential tool to reach a starting point for cash rent considerations. The numbers discussed below assume the landlord owns the irrigation equipment.
“Farmers and landowners alike want to know what they should offer or charge for farmland next year. The question is simple, while the answer is more complicated. There is no formula or equation available that will definitively provide an objective value for farm or pasture land. The caller wants to know what the UNL or USDA survey of cash rental rates says to help them determine the correct starting point for discussing cash rent for the following year. While I am glad to provide that information and do provide that information, I am more uncomfortable than ever in providing that information. Why am I not feeling good about that? Because the price of cash rent for a piece of farm ground should be based on the productivity of the ground. It is important to think about the value being tied to yield potential.
One quick way to do the calculation of productivity is to take the last 5 year average corn and/ or soybean yields for the farm you are renting times the local elevator price for 2012. This calculation equals the estimated gross income per acre. Take that number multiplied by 25-30% for corn or 30-33% for soybeans with the lower percentages for dry land crops and the higher ones for irrigated acres. It gets you to a starting point for that cash rent negotiation. Many want to set rent based on the 2011 high price of about $7.00 per bushel, but that price has never been available for the 2012 crop. Using the 2012 fall elevator price is more realistic of what might happen next year. Using this information as a starting point and combining it with the information from the surveys will help with fair negotiations of the cash lease. The example percentages were determined by working through UNL budgets when determining cost/acre.
As an example – 200 bushel irrigated corn times $5 per bushel (2012 harvest price) is $1,000 gross per acre. 30% of 1000 is $300 per acre (corn acres). Soybeans: 60 bushel beans times $11 per bushel is $660 times 33% is $220 per acre – landlord’s share. If we have 1/2 acres beans and 1/2 acres corn then average the two rent numbers – or $260 per acre average for the farm. That is how I think we should arrive at a discussion point for cash rents in the upcoming year based on productivity.” For more information, please contact Allan Vyhnalek, 402-563-4901 or e-mail AVYHNALEK2@unl.edu.
Watering in Winter
Wow-what unbelievable weather we’ve had! The warm, dry weather has been great for our cattle producers but hopefully we get some spring rains to recharge our soil profile for the crops and pastures. Today feels more like winter!
With the warm weather last weekend, I spent some time watering shrubs and evergreen trees since I planted several shrubs this fall and it’s been dry. If feasible, it is fine to water during winter, particularly if you have fall-planted trees, shrubs, or perennials or evergreens in windy locations or along the south sides of homes. If established plants were well watered during summer and fall, most should be fine since they are dormant and temperatures are cool. If we do not get much winter moisture, early spring watering will be important.
Kelly Feehan, UNL Extension Educator, says that some precautions are needed when watering during winter. She says to only water when the soil is not frozen and when air temperatures are around 45 degrees Fahrenheit or higher. Water early enough in the day for water to soak into the soil so it does not pool and freeze around plants overnight. Ice forming on or around plant crowns can cause damage. If you decide to water, keep in mind plants are dormant and not using much, if any, water so while it is a good idea to moisten the soil six to eight inches deep, heavy or frequent watering is not needed.
The roots of plants are not as hardy as the above ground portions. If there is an open winter with little snow cover and temperatures turn quite cold, roots can be killed by cold temperatures. Cracks in soil allow colder air to penetrate and increase this risk. Moist soils do not develop cracks and remain warmer than dry soils. Ultimately, we’ll just have to see what the remainder of the winter and the spring will hold.