k-state research and extension western kansas cropland lease arrangements in 2009 daniel obrien...
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K-State Research and Extension
Western Kansas Cropland Lease Arrangements in 2009Daniel O’Brien
Extension Agricultural Economist
K-State Research and Extension
II. Farmland Prices & Cash Rental Rates
By Region:Southwest, West Central & South Central KS
By Land Use:Non-Irrigated & Irrigated Cropland
Kansas Crop Reporting Districts (CRDs) Kansas Agricultural Statistics (KAS) reports average cash rent values for Non-Irrigated, Irrigated, & Pasture land at the CRD level
40
50
60
10
30
20
70
80
90
Non-Irrigated Farmland PricesSouthwest, West Central & South Central KS (1977-2008)
$670
$1,160
$0
$350
$700
$1,050
$1,400
'77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09
Southwest West Central South Central
SW KS (2003-2008): +9% /yr
Non-Irrigated Farmland Cash RentSouthwest, West Central & South Central KS (1979-2008)
$33.50
$41.50
$0
$10
$20
$30
$40
$50
'79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09
Southwest West Central South Central
SW KS (2003-2008): +6.2% /yr
Non-Irrigated Farmland Rent-to-ValueSouthwest, West Central & South Central KS (1979-2008)
5.0%
3.6%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
'79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09
Southwest West Central South Central
Irrigated Farmland PricesSouthwest, West Central & South Central KS (1979-2008)
$1,350
$2,200
$0
$500
$1,000
$1,500
$2,000
$2,500
'77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09
Southwest West Central South Central
SW KS (2003-2008): +8.6% /yr
Irrigated Farmland Cash RentSouthwest, West Central & South Central KS (1979-2008) $90
$88
$0
$25
$50
$75
$100
$125
'79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09
Southwest West Central South Central
Irrigated Rent + Center Pivot estimateSouthwest, West Central & South Central KS (1979-2008)
$130
$128
$0
$25
$50
$75
$100
$125
$150
'79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09
Southwest + CP West Central + CPSouth Central + CP
U.S. Farmland Rent-to-Value TrendsKastens & Dhuyvetter (2008)
1951 1958 1965 1972 1979 1986 1993 2000 20070%
1%
2%
3%
4%
5%
6%
7%
8%
9%
pe
rce
nt
39-state average rent-to-value ratios, by year, 1951-2008
Irrigated Cropland Leases Scenarios for Southwest Kansas
A. Full Irrigation Corn Fully Irrigated Corn: 125 acres Wheat-Fallow Dryland Corners: 30 acres
B. Limited Irrigation Corn / Wheat / Sunflower Irrigated Corn: 65 acres Irrigated Wheat: 30 acres Irrigated Sunflowers: 30 acres Dryland Corners: 30 acres Wheat-Fallow
A1: Total Costs & Returns (LL owns CP)
Costs, Breakevens & Net Returns
A2: Capital & Labor Costs, Prices
Prices
A3: Operator % Contribution (LL owns CP)
LandownerOwns Center Pivot
Tenant owns Power Unit
Equitable Shares
Tenant: 67.4%LL: 32.5%
A4: Operator’s Costs-Returns (LL owns CP)
Equitable %Share:
67.4%
Landlord owns Center Pivot
PositiveReturns over Costs
(+16%)
A5: Landlord’s Costs-Returns (LL owns CP)
Equitable %Share:
32.6%
Landlord owns Center Pivot
PositiveReturns Over Costs
(+16%)
Land Return: 5%
A6: Cash Rent Estimates (LL owns CP)
5% on LandCenter Pivot Cost
Landowner’s EquitableShare of 32.6%
(LL owns Center Pivot)
If 100% of Profit goes to Landowner
Comparing the 3 Approaches
A7: Operator % (Tenant owns CP)
Tenant owns Power Unit & Center Pivot
Equitable Shares
Tenant: 73.7%LL: 26.3%
A8: Cash Rent Estimates (Tenant owns CP)
5% on LandNo Center Pivot Cost
Landowner’s EquitableShare of 26.3%
(Tenant owns Center Pivot)
If 100% of Profit goes to Landowner
Comparing the 3 Approaches
B1: Operator % Contribution (LL owns CP)
Limited IrrigationWater
LandownerOwns CP
Tenant owns Power Unit
Equitable Shares
Tenant: 64%LL: 36%
B2: Cash Rent Estimates (LL owns CP)
5% on Land, Center Pivot Cost
Landowner: 36% (Owns Center Pivot)
If 100% of Profit to Landowner
Comparing the 3 Approaches
B3: Operator % (Tenant owns CP)
Limited IrrigationWater
Tenant owns Power UnitCenter Pivot
Equitable Shares
Tenant: 71.3%LL: 28.7%
B4: Cash Rent Estimates (Tenant owns CP)
5% on Land, No Center Pivot Cost
Comparing the 3 Approaches
Landowner: 29% (Tenant Owns Pivot)
If 100% of Profit to Landowner
Non-irrigated Cropland Leases Scenarios for Southwest KansasA. Wheat – NT Corn - Fallow Rotation
Reduced Till Wheat: 53 acres NT Corn: 54 acres Fallow: 53 acres
B. Wheat – Fallow Rotation Reduced Till Wheat: 80 acres Fallow: 80 acres
2009 Wheat – Corn –Fallow Budget
Wheat-Corn-Fallow Equitable Share%
Equitable Shares
Tenant: 73.2%LL: 26.8%
Landlord equitably shares Fertilizer & Chemicals
Wheat-Corn-Fallow Cash Rent Estimates
5% on Land
Landowner’s Equitable %
Share = 26.8%
If 100% of Profit to Landowner
Comparing the 3 Approaches
2009 Wheat-Fallow Budget
Wheat-Fallow Equitable Share%
Landlord equitably shares Fertilizer & Chemicals
Equitable Shares
Tenant: 63.2%LL: 36.8%
Wheat-Fallow Cash Rent Estimates
5% on Land
Landowner’s Equitable %
Share = 36.8%
If 100% of Profit to Landowner
Comparing the 3 Approaches
