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Farmers forced to accept high land rents despite low crop prices Grain prices are way down, but it’s expected land rents will take awhile to follow suit

Almost a third of Alberta farmland is rented, with per-acre rents ranging from $25 to $100 depending on the land’s productivity. file photo

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rop prices have plunged, but land rents look like they’ll stay high for a while. “I know that there are guys around here who are renting land for way more than it’s worth,” said Kelly Burkhardt, a Wetaskiwin grain and cattle farmer who rents 450 of his 1,000 acres of cropland. “At the end of the day, it comes

down to, ‘Are you going to pay this? If not, I’ll find someone who will.’ “And there are lots of guys who will right now. I have heard of guys around here who will go around trying to outbid their neighbours.” The young farmer is quick to add he is paying “the right price for the land I’m renting,” but that may be the exception rather than the rule as rents, which soared from 2007 to 2013, are expected to hold or be close to their peak level in 2014.

But the economics don’t justify that, says a farm business management specialist with Alberta Agriculture and Rural Development. Last year, Ted Nibourg ran the numbers on a four-year rotation producing “respectable yields” (38 bushels for canola, 77 for barley, and two years of wheat averaging 61 bushels) and estimated it could justify a rent of $90 per acre. Today, a fair rent in that situation would be $53, he calculated. “I field a lot of calls on cash rents

and the big problem that I have is educating absentee landowners — or landowners who are a couple generations removed from the farm — who don’t understand agronomics,” said Nibourg. “There’s a mistake and an assumption to a certain degree, and a perception that land rental rates are a function of a return on investment on land.” Those expectations can add up to serious dollars as almost a third of Alberta farmland is rented, with

per-acre rents ranging from $25 to $100 depending on the land’s productivity — and what someone is willing to pay.

Still bidding

Robert Semeniuk of RAS Farms near Smoky Lake said he knows his rent bill won’t be smaller this year. “I’d love the rates to go down because it would make the books

see lAND RENTS } page 6

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