Rent and the farm bill

Will rental rates for land increase as a result of the 2002 Farm Bill? Maybe not, according to a study conducted in southern Minnesota. The study assessed the impact of the farm bill on cash rents using historic yield and expense information from farms in the area along with expected government program receipts. Dale Nordquist, Center for Farm Financial Management, and Gary Hachfeld, regional extension educator in south central Minnesota, conducted the study.

They report that the farm bill will not generate profits to support substantially higher cash rental rates. Instead, the break-even cash rents should be about $97/acre, which is the same average rental rate of the last four years. This rate assumes that yields and expenses remain the same as the averages for 1998 through 2001.

The researchers assumed that 100% of the crop base is in the program. For each 10% reduction of base, the break-even is reduced by about $3.50/acre. Therefore, a 25% reduction in base means a grower must pay a lower cash rent of $88.50/acre to break even, versus the $97/acre rent.

The study also found that a corn base is worth slightly more than a soybean base when bidding on rental land. To see the study, go to www.cffm.umn.edu/Pubs/cashrent2002.pdf. For more information, contact Gary Hachfeld at 507/934-0360 or Dale Nordquist at 612/625-6760.

AGCO to buy Sunflower

AGCO has signed an agreement to acquire the assets of Sunflower Manufacturing Company, a product line of SPX Corporation. Sunflower, located in Beloit, KS, builds tillage, seeding and specialty harvesting equipment.

Robert J. Ratliff, chairman, president and CEO of AGCO, stated, “The acquisition of a major tillage equipment manufacturer will enhance the offerings of the company in the broad acre markets and provide new technology for the growth of the Challenger track tractors. AGCO intends to operate Sunflower as an independent business and retain the current management and employees.”

AGCO's long-term plans include expanding Sunflower products into export markets.

Land rent software

For help navigating the maze of options for land rent and understanding how the 2002 Farm Bill will affect rental rates, look into FairRent, a software decision aid from the Center for Farm Financial Management, University of Minnesota. Developers of the software recently upgraded it with details from the new farm bill. The grower supplies the FSA base acres and yields for government crops as well as local loan rates. Then FairRent shows how the farm bill affects both cash and share rental agreements.

“The sensitivity tables that look at what can happen when prices and yields don't meet or exceed expectations will incorporate LDP and CCP payments at lower price levels for a more accurate analysis,” reports Kevin Klair, extension farm management economist at the center. “The output also includes a new page that provides a complete summary of projected government payments broken down per acre and for the parcel as a whole.”

FairRent sells for $95. Contact Center for Farm Financial Management, 130 Classroom Office Bldg., 1994 Buford Ave., St. Paul, MN 55108, 800/234-1111, visit www.cffm.umn.edu or www.freeproductinfo.net/fin, or circle 194.

Used Cats for sale online

If you're looking for a deal on a used Cat, check out www.catused.com. Cat dealers in the U.S. and Canada often list their used inventory on the site. A search engine sorts by manufacturer, product family, year and model. A details page includes photos and data such as retail price, service meter hours, condition, machine configuration and serial number prefix.