April 6th, 2016

Farming is a high-risk, low-return business most of the time.

This year, based on current commodity prices, we’re in for one of those marginal years. Barnes Realty does lots of farm management and this was probably the most difficult spring I’ve seen in a long time.  For the first time in several years farmers were not on fire to rent new land and expand their operations.  The biggest reason of course, was the really crummy income projections that they were making based upon the current commodity price levels.  Low prices make for poor crop insurance guarantees and that dangerously alters cash flows.  Fortunately, for those who are on the landlord side of the equation, most farmers are a brave, optimistic lot and Barnes Realty, representing mostly landlords, was able to get all our managed farms rented.  Hopefully we’ll see some strength in commodity prices as the summer wears on and the profit outlook will improve by harvest.  Like I said, we’re an optimistic lot!

Cash rents on the land that I manage ranged from a low of $140 per acre to a high of almost $300 per acre.  We heard of a few $300+ per acre cash rental rates for irrigated land, but our company wasn’t involved in any of those transactions.

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