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Corn+Soybean Digest

Top Ten Cash Rent Justifications

This past week I was in Bloomington, Illinois to speak for the sixth time at the Community Bankers Agricultural Conference. This year we had 135 attendees with at least 25 percent of the audience being young bankers with less than five years of experience. We had great discussion in side conversations concerning land values and cash rents. Based upon this, I came up with Dave’s top ten in justifying cash rents that are out of sight!

  1. 1.

  2. I need to rent the land to fully utilize my machinery and equipment.

  3. 2.

  4. If I don’t get it now, I may not be able to rent it for five to ten years.

  5. 3.

  6. Maybe I can purchase that ground some day.

  7. 4.

  8. Next year’s prices will cash flow it.

  9. 5.

  10. I can cover my cash cost in the short-run, so don’t sweat it.

  11. 6.

  12. The banker or lender says I need it to cash flow.

  13. 7.

  14. The rent’s not so bad if you average it over my total acreage that rented at a cheaper price.

  15. 8.

  16. My neighbor will get it; how will that look at the coffee shop?

  17. 9.

  18. I can get a higher yield than the previous renter.

  19. 10.

  20. We have got to keep this land in the family.

  21. Isn’t it interesting that emotional justification frequently overcomes economic logic? Eighty percent of decisions are based upon emotion!

    Can you add to my list? Please respond!

    Economy

    If the Fed lowers rates later this month, it’s a sign that the economy is in trouble!

    Germany is the second major economic power to experience deflation! Are we next?!

    My Travels

    This week I’m up in New York for an Ag Lending School. My e-mail address is:sullylab@vt.edu

    Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.

    To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.

    This online exclusive is brought to you by The Corn and Soybean Digest

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