MSUE team suggests care with land leases
SCEOLA COUNTY — For years, often decades, and sometimes generations, property owners in the Osceola County area, (and elsewhere as well), have picked up a little extra cash leasing land to neighboring farmers.
Occasionally, a retired farmer will lease land to simply cover the expense of annual property taxes. It’s a good deal all around.
Leased land offers an easy flow of reasonable revenue for the property owner, while at the same time giving increased acreage to farmers at a decent price.
And … it keeps good farm land under cultivation.
Ag professionals, however, are warning property owners they may not be getting the full value for their land lease — not anymore.
“Once upon a time, land leases agreements were signed with neighbors, family members, or friends who needed a little more acreage to better develop their farming operation,” explained MSU Extension educator Jerry Lindquist.
“Things have changed. The price of grains — mainly corn and soybeans — have gone up dramatically creating high profitability for crop farms across the county. Even here in northern Michigan. Today, it’s possible to make $50-100 per acre raising corn or soybeans.
“We’re seeing soybean production increasing in Osceola County as a result.
“Because of price increases in crop production, we’re beginning to see new faces coming into previously untapped areas looking for acreage, and prices for leased land are on the rise.”
Lindquist said agricultural operations located at a distance of 30, 40 and 50 miles away are beginning to look for good farm land in Osceola and neighboring counties.
“Luckily we have quite a bit of idle land that is being brought back into production,” said Lindquist. “At the same time, however, there is also pressure on existing farmlands that have been leased to others at more comfortable prices.
“The pressure is both on farmers in this area who suddenly need to compete for land they have farmed for years under lease, and on property owners who may feel they are being underpaid for their land when they see figures being tossed about ‘out there.’”
Only a few years ago, the lease price for bare ground in this area (for corn, soybean, or oat production, for example), was $20-30 per acre. Today, that same acreage may see $30-55 per acre. This depends on the size of the field, the quality of the soil, the property location, and more.
New leasing agreements are generally signed in a period from December to March.
“Landlords need to know prices for leases are going up and they shouldn’t be taken advantage of,” Lindquist said.
“At the same time, farmers in our area need to be aware that there are operations from outside this ares that are looking for good, productive land.
“While a farmer never want to spend too much on a lease, they also need to know they could be outbid this year and be ready to step up their offer in order to preserve their hold on ag property close at hand.”
Lindquist noted that leased land under alfalfa and hay production could be going for even higher prices, and suggested property owners consider carefully, and review up-to-date information before getting into new agreements.