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Landlord-tenant Cash Lease Workshop, November 2013
 

Landlord-tenant Cash Lease Workshop, November 2013

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Presentation by UNL Extension Educator - Ag Economics Jessica Johnson from Nov. 5-6 workshops at Valentine and Chadron on ag lease agreements

Presentation by UNL Extension Educator - Ag Economics Jessica Johnson from Nov. 5-6 workshops at Valentine and Chadron on ag lease agreements

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  • Did drought of 2012 contribute to large value gains?Double the land market value
  • Three- and five-year trends in values show wide variation across sub-state regions as well as by land classes The five-year all-land average percentage change ranged from 52% in the Northwest District to 103% in the Northeast and South Districts. • By land classes, both the three-year and five-year percentage changes were highest for the cropland classes while the non-tillable grassland and hayland classes experienced much more moderate gains. • For the five-year period 2006 to 2011, the value increases for the Nebraska cropland classes have averaged about 12% per year, while the non-tillable grassland class averaged about a 7% annual increase.• In contrast to the downward real estate value trends across the country for residential and commercial properties during the recent economic recession and anemic recovery, these rates of gain for Nebraska agricultural land values are phenomenal.
  • For irrigated land, the estimated net percentage return on current value (what real estate appraisers call the market-derived capitalization rate) fell below 3.5 percent for the first time in the 23-year series. In financial jargon, this would infer that the expected return on investment (ROI) of an irrigation parcel priced at $10,000 per acre would fall below $350 per acre in annual net earnings. . Sharp downturns in annual returns to land and/or upward-climbing interest rates from present historical lows (rising opportunity costs) could trigger a downturn in land values of significant magnitude.
  • Purchase-for-farm-expansion continues to be a profound force underlying the upward movement of agricultural land values. The scaling up of crop farm size to accommodate the new and more sophisticated precision agriculture technology leads to a strong demand by active farmer buyers who already are farming large acreages. In any given local market, there will tend to be a relatively small number of these larger entities who will be in the market for land when it comes up for sale. As noted in the tables to follow, active farmer buyers will often tend to dominate the buyer side of the market — particularly in the major crop producing areas of the state. Only 1/6 sellers were active farmers
  • More than four out of every ten acres of agricultural land in Nebraska is rented, with the vast majority of those acres under cash rental arrangements.
  • NO NEW DATA UNTIL SEPT. of 2012
  • NO NEW DATA UNTIL SEPT. of 2012
  • NO NEW DATA UNTIL SEPT. of 2012