New survey data shows that about half of farms whose land leases are up for renewal this year are expecting rent increases, with some anticipating a significant increase in land rent as a proportion of production costs.
The rise in land prices coincides with an increase in the cost of owning land, as borrowing costs and farmland values have risen.
RealAgristudies partnered with MNP to examine land lease agreements in the April Canadian Farmer Sentiment Index survey. Real Agriculture Radio Some of the key findings are discussed below.
- Fifty-five percent of farmers plan to renew their land leases this year, though some say this figure is higher than expected due to the prevalence of multi-year leases.
- 53% of farmers renewing their leases this year expect rents to rise.
- 18% expect an increase of 25% to 50%.
Concerns and Impact:
- Keep in mind that leases can take many different shapes and forms depending on the agreement between the landowner and the farmer, which can impact on the long and short term risks and costs to the farmer.
- As MNP’s Stuart Parsons pointed out, high rental fees can hinder producers’ profitability.
- The increased cost of purchasing land due to rising interest rates is impacting the rental market.
- Large variations in production costs between farms affect their ability to pay higher rents, with some farms managing their costs much more efficiently.
Watch as MNP’s Stuart Parsons, Hill & Knowlton’s Megan Murdoch, Kelvin Heppner and Sean Haney discuss this data on our Issues Panel on Friday 31 May. (email address protected) Or contact the RealAg Feedback Line at 1.855.776.6147.
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