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Cattle cuts shrink MO land demand

Farmland prices and land rental rates will likely move higher in the next year in Missouri, according to a recent report. But, there are a couple of variables unique to that state that could shape just how high they climb.

"If you look just strictly at the prices, you think we’re going to go higher on land values and cash rents in 2013, but it was a miserable year in an awful lot of Missouri," says University of Missouri Extension ag economist Ron Plain. "Pasture conditions were terrible and the value of those crops was way down. The price farmers are selling at was good but the total value was down because of low yields."

The cattle herd is shrinking, trimming demand for pasture land. But on the other hand, more existing pasture is being moved into crop production, so the supply's on its way down, too, Plain says. It means that supply and demand are largely following the same track. In the end, it all added up to a 4% increase in crop land rent increases and a 9% rise in pasture rent over the last year, numbers that will likely be slightly smaller in 2012 into 2013.

"With fewer cattle there will be less demand for pasture land," he says in a university report. "On the other hand, we’ve been converting some pasture into cropland. Also, fertilizer prices have been high enough that we haven't been able to do a lot of fertility practices to increase carrying capacity. My expectation is that the demand for land to rent is still going to be fairly strong."

Rising land prices in Missouri are making it tough for many farmers to "swing the pirchase price," Plain says, further fueling the climb in rental rates. It puts a premium, the economist says, on including every detail of the agreement down on paper.

"We encourage landlords and tenants to try to get it down in writing, particularly with respect to terms of the lease and when it is going to be renewed," Plain says. "Lots of times you end up with some misunderstandings about what date the landlord or the tenant need to let each other know if they are going to be farming together again in the coming year."



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