New survey data shows around half of farms that have farmland rental agreements up for renewal this year are expecting rental rates to increase, with some anticipating a significant jump in the land rent component of their cost of production.
Rising land rent costs are coinciding with the increasing cost of owning land, as borrowing costs and farmland values have climbed.
In collaboration with MNP, RealAgristudies looked at land rental agreements in the April Canadian Farmer Sentiment Index survey. The Friday Issues Panel on RealAg Radio included the discussion below on some of the key survey findings:
- 55% of farmers plan to renew land rental agreements this year, a figure which some say is higher than they expected due to the prevalence of multi-year rental agreements;
- 53% of farmers renewing rental agreements this year expect land rent will increase;
- 18% are bracing for an increase between 25 and 50%.
Concerns and implications:
- Keep in mind that rental agreements can take many shapes and formats depending on the agreement between the landord and farmer, which may impact the risk and or cost to the farmer over the long and short term.
- As Stuart Person of MNP noted, high rental rates may hinder producers’ profitability.
- Increased cost of buying land, driven by higher interest rates, is affecting the rental market.
- Wide variability in the cost of production between farms influences their ability to pay higher rents, with some farms managing costs much more efficiently.
Watch/listen to Stuart Person of MNP, Meagan Murdoch of Hill & Knowlton, Kelvin Heppner, and Shaun Haney discuss this data on the May 31 Friday Issues Panel. If you have any feedback to [email protected] or the RealAg Feedback line at 1.855.776.6147.
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