|
SW KS, near Dodge City | We don't handle any land management.
My views aren't for the 90% of operations that are doing just fine, it's for the 10% on the margin that need to realize that they can't operate just like the 90%.
What I'm trying to communicate is that things have to change for operations that are in a financial bind. I also know of operations that aren't in that bind that will be willing to step in and rent ground at levels that guys in a bind are saying don't work. So, Operator A is in a bind and needs to reduce expenses, he goes to Landlord X and gets rent negotiated down. Operator B is not in a bind and is not reducing rents. How long do you think Operator A stays in business?
And I don't care if it's a 100K house, a 400K house or a 1M house. We could substitute in anything, it's still an expense draw on the business. I have no idea how long or short the downturn is, but I do know that some may or may not survive it based on changes they make now.
I had a post above about a land sale out by Ulysses. Dryland cropland, and it's good hard ground, not sand, that brought $350-450/acre. There were 4 quarters sold, 1 at 350, 1 at 400, 1 at 425 and 1 at 450, plus a partially irrigated (it had a 500 GPM well on it) at 550/acre. Now, I'm not sure what land prices are going to do, but seeing those numbers will make about anybody set up and take notice. Do I think that's what all ground would sell at in that area? No, but I do think that when a lender has to get an appraisal on ground in that area, that will definitely be one of the comparable sales used to determine value. Guess what happens when thing trend down? Everybody gets more cautious. Farm Credits have already started decreasing the % they will loan on land. That by itself will impact the potential buyers pool. | |
|
Rent negotiations
