STRAIGHT FROM THE HORSES MOUTH



Duane A. Lienemann
UNL Extension Educator

       Well, that was no surprise, a chance for rain and we get drizzle. I think we need to hold on to our britches as we could have a three-peat and I am not talking basketball.  The March Madness I am talking about unfortunately is how dry it is and the future does not look much brighter for the rest of the spring. I do hope that I am just being a worrywart, but it isn’t looking good. I think that our producers need to hope for the best but prepare for the worse.  
     I think this is particularly true with our livestock producers as our pastures and hay lands are certainly showing the effects of the last couple of years of drought.  If things don’t change, we may have to look at waiting a few weeks before turning out the cow/calf pairs and perhaps once again limit the number of cows grazing. If this is the case I suggest that our landlords, if renting out their pasture, may want to consider going from a per acre charge for rent on pasture to instead to a cow/calf pair charge per month and accept the detriments that come from effects of drought.  Do your renter and especially your pasture a favor and adjust your rent accordingly, as we are all in this thing together and stewardship should be our first concern. 
     While it is hard to give up that extra cash, it is harder and more expensive to bring back a pasture that is not taken care of properly.  I do know that there will be a lot of pressure on pasture owners to rent their grass and will likely be offered some good sums of money to do so, but stop and think it over, consider the long term health of your pasture and use some good common sense. This is not the time for the greedy emotion to kick in. Our pastures are already in strained condition.
     Speaking of rental rates, I know that a lot of folks have been patiently waiting for the UNL Extension Land Value and Rental Rates guide that comes out about this time every year. Well the preliminary survey has hit the web, so let’s take a look at it this week. If you have an internet connection you can find this most often requested document by simply going to: http://agecon.unl.edu/cornhuskereconomics   and look for the “Nebraska Farmland Values Remain Steady” document. I want to remind everyone that this is just a preliminary survey and the actual final results from the survey will be published in early June 2014 and will be available electronically via the Nebraska Farm Real Estate website which is located at: http://agecon.unl.edu/realestate.html  which also has some very useful stuff on farm real estate.
     It shows that the average statewide value of farmland last year rose 5% in Nebraska, a considerably lower rate than in recent years. Land values and cash rental rates from Feb. 1, 2013, to Feb. 1, 2014, are used to determine the data that appears in the Nebraska Farm Real Estate Market survey and is used to form the basis for this preliminary guide. Farmland values in recent years have increased sharply. The overall increase of 25%, shown in the February 2013 report followed increases of 22 and 32% in the two previous years, leaving the 2013 all-land value more than double the value in early 2010. However, that has leveled off this past year or at the very least has slowed considerably. It looks like the spike has ended and leveled off.
     This year, the largest increase by land class actually occurred for non-tillable grazing land, at 7% statewide. Non-tillable grazing land includes pasture and rangeland that does not have the current potential to be converted into cropland for small grain or row crop production. That is not a surprise to me as we have lost a lot this type of land in the last few years and there just isn’t as much out there for the competition for grazing or hay. With the current high prices of beef we could see a real spike in this area especially if we have to take drastic measures to stave off the effects of a possible third year of drought. 
     Record high cash and futures livestock prices  translated into strong increases for non-tillable grazing land seen throughout the state for rangeland and particularly with strong increases as high as 32% in the South District where I am located, much higher than the state average. What is amazing to me is that the rental rate/ acre of pasture however went down from last year.  One could only surmise it has to be because landlords are limiting the number of cow/calf pairs on their rangeland and are working with the renters in pricing their lease. I have actually heard that pasture and cow-calf pair rental rates have increased significantly this year due to higher beef cattle prices, the lingering effects of the drought and the conversion of some marginal land to crop production, however this survey does not reflect this for the South District. If you go by rumors and the increase in the going rates for grazing corn stalks, I would be surprised if this may be low and I am anticipating that this set of data may change by June.
     Increases in dryland cropland values also varied across the state depending upon the location and potential for irrigation. You would not expect as much considering the value of water and irrigation. But it still followed the trend of slight increase or leveling off. Observed changes in the value of gravity irrigated and center pivot irrigated cropland ranged from 2% decreases to almost 20% increases depending on location with an increase of only 4% for each of the two irrigation land classes. Lower anticipated grain prices in 2014 have led to lower average cash rental rates for dryland, gravity irrigated and center pivot irrigated cropland as profit margins begin to tighten and with the outlook for prices, this may continue to occur. 
     Whatever the situation, the landlord and tenant must communicate with each other so appropriate factors are taken into consideration and a fair rate is established. Average cash rental rates for the South District for center-pivot irrigated cropland is at $296/acre. Average dryland cash rental rates were estimated at $105/acre and gravity irrigated cropland at $225/acre. Pasture cash rental rates were estimated at $35/acre and/or $39 per Cow/Calf pair per month. . I do want to point out that we all should remember that this survey is not meant to be a “one-size fits all” instrument. These are merely guidelines and a starting place. There are a lot of factors that need to be considered and they should be. It all comes down to common sense!
   The preceding information comes from the research and personal observations of the writer which may or may not reflect the views of UNL or UNL Extension. For more further information on these or other topics contact D. A. Lienemann, UNL Extension Educator for Webster County in Red Cloud, (402) 746-3417 or email to: dlienemann2@unl.edu or go to the website at: http://www.webster.unl.edu/home