Audio Transcript:

James Mintert: Welcome to the Purdue Commercial AgCast, the Purdue Center for Commercial Agriculture’s podcast, featuring farm management news and information. I’m James Mintert, director of Purdue Center for Commercial Agriculture, and joining me today are my colleagues, professor Todd Kuethe who holds the Schrader Chair in Farmland Economics here at Purdue. And Professor Michael Langemeier, who is the associate director of the Center for Commercial Agriculture.

This podcast is part two of a two-part series focused on the results of the Indiana Farmland values and cash rent survey conducted each year by Purdue’s Department of Agricultural Economics. In this podcast will focus on the survey’s results regarding changes in farmland cash rental rates across the state and regionally, as well as key factors influencing cash rental rates. In the first podcast in this series, we focused on farmland values in Indiana, both statewide and regionally. A detailed report summarizing the Indiana Farmland Values and Cash Rent Survey is available in the August Purdue Agricultural Economics Report. You’ll find a link to that report on the homepage of the Center of Commercial Agriculture’s website located at purdue.edu/commercialag. At the website, you can also download a set of slides containing the charts we referenced when recording the podcast. Finally, this podcast is available as a YouTube video in the Center for Commercial Agriculture’s YouTube channel, and on the Center’s website.

Todd, start off by giving us some background about the survey and the history of the survey.

[00:01:31] Purdue Farmland Values & Cash Rental Rates Survey Overview

Todd Kuethe: Yeah, so the cash rental information comes from the same survey we collect land values, right? So that’s why it’s creatively titled the Purdue Farmland Value and Cash Rent Survey. Which has been in the department since the mid 1970s. And we basically survey folks who we define as people who interact with the land market regularly as part of their profession. So a lot of rural appraisers, ag lenders, farm managers, we have some farmers in there as well. But predominantly people are more involved with land sales, either in the sales side of it or financing side of it.

And so we ask about the land values this summer and also the previous year, or previous winter, and then going into next year. But for cash rents, we ask about what is cash rent in your county. So we ask ’em about their county and we summarize that those as a state level and at the regional level. So for six regions around the state and we ask them about three quality grades. Those are subjectively defined as top, average and poor. We also ask them what is their long-term corn yield? As the measure of productivity for each of those in those areas. So we can hopefully try to equate things as a per bushel equivalent.

Right?

James Mintert: Yeah.

Todd Kuethe: So as it varies around the state.

James Mintert: So, and as you think about it other states do something a little bit similar as, as Iowa State, Illinois do similar surveys.

Todd Kuethe: Yes and no. So Iowa State does a cash rent survey as well. I think they do that one in the spring, if I’m not mistaken. And then in the University of Illinois, they have a couple of different outputs. So one is that they report cash rents from the FPFM, the Farm Management Association. One of the large groups that respond to our survey a lot are the Indiana Society of Farm Managers and Rural Appraisers. So they have a similar chapter in Illinois and they do some surveys of them as well for cash rent. So they have sort of a variety of outputs. So we share a lot in common, but all of these sources are a little bit different.

James Mintert: A little bit different, but maybe close enough. You can still do some pretty reasonable comparisons across the states, right?

Todd Kuethe: Yes, I think so. And then the easiest way to compare across states is the USDA also, which their report unfortunately is coming out a little bit behind when we’re recording this, so we don’t know yet what they’re saying about this year. But they report state level and then not every year but in most years, report county level as well.

James Mintert: Good point. So listeners are interested to know. What did you find out for cash rents here in 2023?

[00:03:48] 2023 Indiana Cash Rental Rates Survey Results

Todd Kuethe: So cash rents are up just a bit, around two to two and a half percent depending on land quality around the state. So we’re at $306 for the top quality land. Average at 257 and poor quality at 212. Those are all sort of around 2% up from what we saw the previous year. The nice thing about surveying, about cash rental rates is people either be upset that they did not go up enough or that they went up way too much. At at 2%, I think I should probably not expect a lot of calls from either side. So.

James Mintert: So the statewide averages though, mask the variability as you move around the state. ’cause the regional averages deviate quite a bit from those state level averages.

Todd Kuethe: Yeah. It deviates both by land quality and by region. Right. The survey is difficult. So with all surveys, which I mentioned this when we discussed the land values portion, I feel more comfortable the more opinions you can aggregate, right? So at the state level, I feel much more confident as we move into the six regions and our number of respondents gets lower. But also each of those respondents potentially is in areas where they have harder to access information from producers or land sales in those areas, we can see some pretty high variability. For example, in the southeast part of the state, we saw real high growth in cash rental rates but actually some modest declines in some other parts of the states, like in the southwest or in the west central region.

James Mintert: Were you surprised at some of the declines?

Todd Kuethe: Yes and no. So thinking about, you know, when rental negotiations were going on last fall, last winter into the early spring, there were a lot of people very concerned about rising input costs. And so I had a lot of farmers saying, I just can’t afford to have cash rents continue to go up. I know they were arguing for cash rents to stay flat or go down. But then other places where at the same time their revenue side was really strong. So you’d have people, landlords arguing, you should share some of that revenue that’s picking up.

And so I knew going into this year a lot of uncertainty. I didn’t really know what to expect and so I was kind of surprised by that variation. But we were talking about this beforehand. I think there’s also a bit of convergence around the state, right? So we tend to see in the places with historically high cash rental rates maybe sort of coming down a little bit and in places that had lagged behind maybe coming up.

James Mintert: Yeah, the one thing that jumped out at me, well really a couple of things I guess. One was the fact that you showed some fairly substantial increases in cash flow rates in central Indiana. And at the same time, west Central was maybe softening a little bit. But you mentioned convergence. If you look at the central Indiana average, that came out at 275 for average quality land and the west central average for average quality land 278 and prior, that was not the case. Those were not matching up like that.

Todd Kuethe: Yeah. So there is some kind of convergence to east to west bands around the state being relatively even and maybe not as strong of a split kind of

James Mintert: The other one that surprised me a little bit, well, maybe a lot, was southeast Indiana where you showed some very large increases.

Todd Kuethe: Yeah. Southeast has been an interesting place as I learned more about the landmark in Indiana during the survey the last few years. And Southwest to some degree as well. They talk a lot more about limited amount of land for sale, increased people purchasing land for non-farm purchases, or people buying for recreational reasons, or someplace to hunt. And so, things seem to be moving around a lot. Right. And if you talk to folks on the ground, they’ll tell you it seems like there’s always sort of some big, high or low thing that has just happened, whether it’s a land sale or some agreement that seems to be a lot of uncertainty.

James Mintert: Yeah, I just looking at the values, it looks like the southeast was playing catch up a little bit. Right. You’re looking at percentage increases ranging from about 33%, as much as 47% depending on the quality of the land. But I look at the numbers. Average quality land in southeast at 246 an acre. Poor quality 208. So maybe again, that convergence factor is going on there a little bit.

Todd Kuethe: Well, and I think the convergence you really see looking at the top across the southeast and southwest, right? So 296 compared to 299 is definitely, pretty close to equal.

James Mintert: Yeah. Yeah, good point. So cash rents over time have changed quite a bit.

Todd Kuethe: Yeah. This is going back to 2000, so we’ve had these like really high peaks in land value appreciation, but we don’t really see that in cash rental rates. They seem to kind of go up or down by sort of a small amount. And so can feel like they’re kind of flat? But you know, when you take a longer view and look back to sort of where we started 20 years ago, almost 25 years ago in 2000, you know, cash rental rates are much higher. And so we’ve seen a little bit of growth in the last year or two. So in a nominal sense we now have the highest cash rent per acre across all three land qualities, beating what we were seeing in top and average around 2013, ’14, and actually it was just last year for the low quality land that set their record. It’s been sort of modest, but sort of continual growth over this period.

James Mintert: Yeah. It is interesting to look at how much they’ve changed over that not quite a quarter century. Going back to 2000, what high quality land was running for $140 an acre, and now we’re up over 300. Right. So.

Todd Kuethe: Yeah, and as always the challenge with sort of looking at rental agreements, rental rates, I’ll still have people come to me and say like, you know, but your rates seem low, like everybody I know would rent at the rates that your survey’s putting out. Right. So you know, even within a single farm, but for sure within a county or a region, really high variability in terms of what average maybe masks, it’d be interested to even look within the top, what kind of spread there is there as well. Right.

James Mintert: So let’s just kind of summarize what you found in the survey, and then we’re gonna talk about some other factors influencing cash rent as well.

Todd Kuethe: Yeah, so the big takeaway is there’s been modest growth, two to two and a half percent statewide average in terms of what we’ve seen in cash rental rates. But that does mask some of that variation we talked about from region to region or within different quality grades. So we did have places where we saw some pretty large increases in cash rental rates and some places that had mid-level declines. We didn’t see absolutely plummeting in cash rental rates in any of the instances. But there was quite a variation around the state.

James Mintert: One question that Michael and I get frequently is some discussion around the idea of whether or not there’s some kind of a flex lease. Did you pick up any of that in the survey?

Todd Kuethe: You know, unfortunately the survey doesn’t really ask about that. We just ask about cash rental rates. In fact, that was something we’ve talked about in the past is wanting to be able to get more information about what variety of leases people are using and then maybe how that influences how they report to us on this survey. Right. It does seem like talking to folks around the corn belt in general, that there’s been an increase in these hybrid leases or bonus structure leases.

James Mintert: There’s certainly a lot of discussion. Michael and I always debate as to how many of these just wind up being, thinking about it versus actually putting in place one of the hybrid or flex leases. But we definitely get questions about that.

Michael Langemeier: Anytime you have a a net return years like ’21 and ’22, this discussion’s gonna occur because if you had a fixed cash rent, that was a much lower rent than what it would’ve been if you had a flex rent. It’s a 50 to a hundred dollars higher if you’d had a flex rent. And so that’s kinda the response, I think, to the very high net returns per acre we’ve seen.

Todd Kuethe: Well, so first I’ll start by saying, people usually only call me when there’s a problem. But I have gotten a lot more calls from people who are using flexible agreements, particularly with in this last year when we had high commodity prices going into the season that they were, I got calls from a couple landowners that said, you know, my tenant wants to raise those trigger prices, at which point I would get some of that bonus ’cause of the high commodity prices. Or, you know, they’re wanting to change that sort of base rent. And, and what do I do about the commodity prices or whatever. Right. So I, I definitely get more calls about it. But yeah, I agree that some of that might just be people talking about whether or not they wanna do this and then.

James Mintert: That’s been my reaction, I guess when I’ve had people ask me about this at workshops. As soon as they start thinking about the fact that they have to make decisions about what price to use, what’s the source of that price, when will it be calibrated or calculated.

Michael Langemeier: The base rent, the threshold, and then what price to use. Those are three huge decisions. And quite frankly, with some landlords, it’s probably gonna be difficult to negotiate those things.

James Mintert: Yeah, yeah. So it’s not that we’re discouraging people from doing it, but it is Well, it’s just an interesting point with respect to people think about it, but it’d be interesting in a future survey to find out how widely they’re being used.

Michael Langemeier: The nice thing about them is they’re kind of a combination of the fixed cash rent and the share lease, and , they’re similar to the fixed cash rent. The base rent is usually a little bit lower than the fixed cash rent, so you have a base there, so it can’t go below that base. But also on the upside shared leases hit home run when prices and yields are very good, that’s when a flex rent does really well. And so it’s really a combination of those two leases. You’re sharing a little bit more risk, but if you have really strong yields, strong commodity prices like we did in ’21 and ’22, the bonus is pretty big. And so there’s definitely something to look at.

James Mintert: So speaking of that, yeah, you’ve looked at a chart here, and we’ve used this on some previous webinars, looked at cash rent relative to net returns to land.

[00:13:04] Cash Rent & Net Returns to Land

Michael Langemeier: Yeah. One of the things that’s a little easier to predict cash rent than it is land values, because land values is a lot of different factors. You take net income, outside investor interest. You have interest rates, you have inflation. All of those things matter. When it comes to land values, you talk about cash rent, it’s primarily driven by the net return to land. And I’ve found out that even if you looked at last year’s net return to land, It goes a long ways to explaining what the cash rent is going to be this year.

What I’ve done in this chart is I’ve illustrated the net return to land from 2007 all the way to a ’23 projection, and I’ve also have cash rent for west central Indiana during that same time period. And there’s a couple things I want to note with respect to this chart. First of all, it’s very obvious that cash rent is much more stable than net return to land. That makes perfect sense. If you realize that it would be very difficult to negotiate a $50 change in cash rent from one year to the next. Net return to land can change a hundred to $150 in in one year.

You’re not gonna negotiate big changes like that in one year. And so cash rent’s gonna be much flatter. But if you do see a period where net return to land’s going down several years in a row that’s gonna drive down cash rent. And the same on the upside. If net return to land is increasing several years in a row, that drives up cash rent. So, for example 2020, 2021 and 2022 were very good years. From a profitability standpoint, a net return to land standpoint. That’s created the upward pressure on cash rent that we’ve seen the last two or three years.

And so looking ahead, this is a projection, but we’re projecting the net return to land in 2023 to be considerably lower than it was the last three years. So that puts a little bit of downward pressure on cash rent. How much downward pressure? It really depends on what the corn price is this fall. Is the corn price gonna be 4.50? Is there gonna be 5.50 or somewhere in between. And so you know, obviously if it’s a little bit lower, then there’s gonna be more downward pressure on cash rent versus if it’s a little bit higher. But using the current corn and soybean prices, we’re looking at net return to land that’s quite a bit below what the current cash rent is in west central Indiana. And that’s not gonna create necessarily huge change in cash rent because cash rent’s sticky over time. But I, you are looking at a situation where you could easily see a two to 3% decline in cash rent in ’24 compared to ’23.

Todd Kuethe: The other thing that your chart shows, and this isn’t management advice, but it does seem like there are some farms on the margin that have to make the choice of, do I continue to pay this cash rent even though the return from that might be relatively low ’cause I don’t wanna lose it forever. Right. That’s the, the talk that I hear a lot as well.

So I think that’s something that kind of puts the floor on the cash rent is that people maybe are unwilling to kind of just walk away even if it doesn’t make sense this year. Maybe next year I’ll more than reach up for it.

Michael Langemeier: That’s a really good plug for a spreadsheet I just uploaded this week. The long run cash rent spreadsheet has been revised and it walks people through that. I’ve got a ’24 budget in there. You got a place for put long run prices. The long run yields in there. And see what your break even cash rent is compared to the actual or projected cash rent. And you’re right, Todd, I mean that’s one of the reasons why cash rent’s more stable is you’re not gonna walk away if your break even cash rent’s only a little bit below that the current cash rent. It has to be substantially below. And not only that, that parcel you’re looking at has to be a large proportion of the land you farm. And, and so there’s a lot of situations where your breakeven cash rent’s gonna be below the actual cash rent.

What we’re looking at here is something a little bit different. We’re looking at that, the overall tendency and I think the overall tendency is for a slight decline in cash rent in ’24. But I said slight.

Todd Kuethe: That, that spreadsheet sounds really good. Where do I find it?

Michael Langemeier: It’s on the Center for Commercial Agriculture website.

Todd Kuethe: Okay.

James Mintert: So this is actually a spreadsheet that we’ve had out there for a number of years. It’s just updated and Michael keeps updating it. Yeah, but what, what the original idea behind that spreadsheet is that you can use that or view that potential loss that you might be incurring in the short run as an option premium.

Todd Kuethe: Yep.

James Mintert: Right. So you’re essentially paying an option premium for the right to continue farming that in the future. And the question is, how large is the option premium and is it too large or not? And it’s actually a spreadsheet we originally put together in that 2014-2015 timeframe. During the downturn.

Michael Langemeier: Yeah. Mike Boehlje and Gary Schnitkey.

James Mintert: Yeah. So we had a significant downturn and really had some people paying some pretty big cash rents. And the question was, do you really want to continue doing that? So,

So you’ve got a model.

Michael Langemeier: Yeah.

James Mintert: That looks at cash rent. And before we go further, tell us what’s in the model.

Michael Langemeier: Well, the model basically is, it’s really simple model. It just says cash rent is regressed on lag cash rent or cash rent from the year before and lag net return to land. So it’s really simple. What was the previous year’s net return to land? What was the previous year’s cash rent? How does that do in predicting cash rent?

Surprisingly well. And so if you looked at any goodness a fit measure, it would be surprisingly well. It does miss a little bit. However, I mean, you look at the ’22 and ’23. I actually had the turning point, right. I thought that cash rent was coming down here in ’23, but it came down more than I thought it was going to. But nevertheless it does a fairly nice job of thinking about where we might be heading in the next year for cash rents. And when I talk to people about where I think cash rent may be going in the next year, I have this model in mind.

[00:18:37] Forecasts for Long-Run Cash Rents

James Mintert: So one of the things we’ve been doing is asking about cash rent to corn and soybean producers in the Ag Economy Barometer surveys that we do every month. We’ve asked this question in the last two months now, so June and July. And we asked, compared to this year, what are your expectations for cash rents in your area in 2024? And the response has been very consistent across those two months. In June, I think 25% of the corn to soybean producers said, they thought cash rents would be higher in 2024 than 2023. We got almost the exact same response in July. 24% said higher. And with respect to the other choices, which were about the same or lower in June, 68% of the corn and soybean producers, said they thought cash rents would remain about the same. In July, it was 71%. So the question is how do we interpret that relative to what you’re saying with respect to your model, Michael?

Michael Langemeier: I think this is suggesting a slight increase. One fourth of the people are saying an increase in less than 10%, less than 5% in July are expecting a decrease with most of ’em saying stable cash rent. But I would think that this suggests a slight increase in land values.

One of the things really interesting about this is you think about all the dry areas in the U.S. right now, and we’re still seeing this result. Typically when you see a lot of drought like that, it tempers a little bit. The increases in cash rent. And so this is really interesting information, I think.

James Mintert: Yeah, just for clarity, when we do the Ag Economy Barometer, it’s focused on corn and soybean producers, at least this question, but that’s nationwide. It’s not just Indiana and it’s not just the corn belt. So we do have people from outside the corn belt responding to this.

Todd Kuethe: I would also love to hear how they say higher. If it’s more like higher or like higher, you know what I mean? Like, because I feel like

James Mintert: an enthusiastic or unenthusiastic.

Todd Kuethe: That’s, that’s one of the nice things about going to like extension events, right, is you can hear also the tone to how things are answered. Right.

Michael Langemeier: And we have asked a question before, I think it was related to some technology adoption question, but we asked the respondents whether they rented ground out or they rented ground to themselves. And overwhelmingly more of ’em rent ground themselves than rent ground out. So they’re on net renters.

Todd Kuethe: Yeah. Yeah. I think, I think the, like the, I’d love to know.

Michael Langemeier: So it’s probably, it’s probably a sigh. Ah, it’s gonna be higher.

Todd Kuethe: Well, and I’m curious though, like the, the intensity to which they think it’s gonna be higher, right? So do they think it’s gonna be higher by a couple of percentage points, or is it like, oh, it’s definitely gonna be higher? Right, so.

James Mintert: So, I’m glad you asked that.

Todd Kuethe: Oh, good.

James Mintert: ‘Cause we asked that follow up question on the Ag Economy Barometer survey. So.

Todd Kuethe: Perfect. Well, what did it say?

James Mintert: So again, the responses were very consistent. Two months in a row we’ve asked this, and this question only goes to people who said they expect rents to rise in 2024. And I have to say, when you, a little bit of a qualifier here, because when you start filtering a little bit like this, the number of respondents here starts shrinking. So our confidence in the results does start to go down somewhat.

But the most common response was five to 10%. Among the people who expect to see a rise in rental rates. In June, I think 49% of those who think rates are going up said five to 10%. In July, 47% of those who think rates are going up said five to 10%. Michael and I were probably both in the camp of expecting people to be more in a zero to 5% category.

And we had a significant number in there. I mean, it was roughly a third in both June and July. And then there’s a small number of people, well 19%. So that’s one out of five of the people who think rates are going up said 10% or more. That’s surprising. That almost suggests to me some folks who maybe are looking at some rates that at least at the current time maybe aren’t real competitive or something, I’m not sure.

Michael Langemeier: And another question we don’t ask, maybe we should ask this question at some point, but that would be kind of difficult to frame this question, is how many of these people that say it’s gonna increase rather rapidly, have tremendous demand in their area for cash rent for whatever reason. Maybe there’s several large farms been trying to expand and it’s just really, really competitive market. And we do run across that in Indiana where sometimes you do see some people bid up ground more than the survey suggests because there’s just so much competition in that area. We really don’t have a feel for that.

James Mintert: Bottom line. It’ll be very interesting to see your survey shows the next time around relative to what we’ve picked up with the barometer.

Todd Kuethe: I am very curious. Well as Michael teed us up here, right, I often think about in context of like, what does this imply about the functioning of the land market, right? So if you think about last year I remember we had record high land price appreciation and relatively modest growth in cash rental rates and looking at the fundamentals thinking, well, you know, they, they should sort of track really close together. We get worried when the fundamentals that support those land values seem to not be as strong, right? So if it’s not getting a high return per acre so. Michael, take it away here.

Michael Langemeier: So I don’t have the answer, but what I’m gonna do next here is we’re gonna look at the long run price or rent ratio which is just the inverse of the capitalization rate. Capitalization rate is rent divided by price. The price rent ratio is price divided by rent. But what we’ve seen obviously since 2004 approximately is, is the, the p/rent ratio. This is just the actual p/rent ratio, not the cyclically adjusted. It’s been much, much higher than this long run average. Another way of saying that, since 2004 the cap rate has been substantially below this long run average. Part of the reason why that has occurred is interest rates have been very low since 2008. Since we had those economic problems in 2008 in the U.S. They took interest rates you know, the fed fund rate almost to zero. And they were, they’ve been low until recently. And so, kind of an open-ended question, what is the cap rate gonna look like two, three years from now? If the current interest rates are still relatively high compared to what they were from 2007 to 2022. I don’t necessarily have the answer to that, but I do think that there is some upward pressure on the capitalization rate or downward pressure on the p/rent ratio because of higher interest rates.

James Mintert: So for clarity here, if you take the inverse of your p/rent ratio, you’ve got a cap rate of about.

Michael Langemeier: About two and a half.

James Mintert: Two and a half percent.

Michael Langemeier: Slightly lower than that. I think Todd was saying 2.4.

Todd Kuethe: 2.4 I think, which is it also at least in our survey, has stabilized over the last couple years. Yeah. I mean, there’s been sort of kind of continued decline since really kind of the mid 1980’s.

Michael Langemeier: Yeah. Yeah.

Todd Kuethe: But, but it’s, looks like it’s leveling off a little bit, right? As an economist, we think about it, there should be sort of a natural limit to how low cap rates can go in functioning markets.

Michael Langemeier: And I’m arguing we probably went below that because of the very low interest rates. And now maybe we’ll increase it to something a little bit higher than that. Does that mean we’re going back to 5%? No, I don’t think so. But we could easily go back to three or something around that.

James Mintert: So again, for clarity, pushing the cap rate, right?

Michael Langemeier: Yeah.

James Mintert: Holding everything else constant. Creates downward pressure on farmland values.

Michael Langemeier: Yeah. Values.

Todd Kuethe: Yeah. Or, or upward pressure on rents. Right. So like they, they can, there’s two ways to equate that, right?

James Mintert: Mathematically you’re right.

Todd Kuethe: Correct. But the argument becomes we need to either see higher returns or we need to see the asset values pushed down a little bit, sort of Right.

Michael Langemeier: I think it goes back to what you were talking about earlier when you’re talking about the outlook for land values and the the corresponding podcast. The podcasts related to land values. We saw some fairly large projections for the upcoming year. Part of that’s reflecting these higher interest rates and the fact that we have mixed factors. Not all the stars are aligned for higher land values. Now we’re in an environment where we’ve got some factors that are negative, including interest rates and it’s just a different environment.

Todd Kuethe: Well, and the, and the thing that I get increasingly get calls and emails about from folks around the state and around the corn belt which you sort of lead to is like increased competition, right? So thinking about land being converted for development uses or energy uses in a variety of forms. Or just, fewer farms in a particular area. So now it’s more competitive among those farmers to, to acquire land. That’s the other thing I’m really curious about here, sort of how that’ll affect land values. In fact, I, I’ve said it for a number of years, it, it’s really hard as an economist to measure, but the thing I’m always curious about is, who has the power in setting the rent? Is it the, the landlord or the tenant who has more market power? Is the, would term what we would use as economists or bargaining power. And, and so I think that a lot of part dictates when we have sort of costs or benefits from ownership or from using the land. How are they gonna divide those among those two parties? It’s

James Mintert: Good question.

Michael Langemeier: And essentially what this low capitalization rate is some of the implications of that is the fact that the capital gain, the return from capital gain now is much larger than the return from cash rent. That’s different from what it was historically.

Yeah. Historically, cash rent was, was similar. The rate of return from cash rent was similar to the capital gain. That’s certainly different today. And it makes the outside investor think a little differently about farmland.

Todd Kuethe: Well, and the other thing too is it’s important to point out that economy wide, we’ve seen a compression of cap rates across asset classes.

Michael Langemeier: Yeah, right. Good point.

Todd Kuethe: And so I often say when there’s troubling signs in the ag sector, I say, well, as an economist, the good news is this is everywhere in the economy, right? So we have these things where it’s like, good news is it’s not just you, it’s all of us. That’s why they call us the dismal science, I guess. Right?

Michael Langemeier: And if you’re the best house on a bad block that’s even better. And ag, I don’t think it’s gonna go into recession where the general economy might.

Todd Kuethe: Oh man. Sounds like we’ve got another podcast.

James Mintert: Yeah, there you go. And on that note, we’ll wrap up the farmland cash rental rates, highlights from the Indiana Farmland Values and Cash Rent Survey. A reminder that the full report of the survey’s results is available in the Center for Commercial Agriculture’s website, purdue.edu/commercialag Along with a copy of the slide deck we used when recording the podcast. And also a reminder that part one of this podcast series focused on farmland values, both for the state of Indiana and various regions within the state. I’m James Mintert and on behalf of the Center for Commercial Agriculture and my colleagues, Dr. Todd Kuethe and Dr. Michael Langemeier thanks for listening.