Soaring Land Prices Pinch Minnesota Farmers And Consumers

By Cathy Wurzer and Gretchen Brown

Rent prices are soaring. That’s true of apartment dwellings in the Twin Cities. But it’s also happening on fields across Minnesota. Two-thirds of farm fields are rented out to farmers, not owned by them. These days, those fields cost a pretty penny. What does that mean for the price of our cornflakes, hamburgers and tofu? You’re probably already feeling the pinch. Kent Thiesse is a Farm Management Analyst and Senior Vice President and MinnStar Bank. He joined MPR News host Cathy Wurzer to answer that question and more.

Audio transcript

INTERVIEWER: Now, you all know that the price of nearly everything is up, and that includes something you might not think about but that factors into the costs of the food you eat. It's the land where a lot of that food comes from. About 40% of farmland in the US is rented. Most of it owned by landlords, who are not actively involved in farming.

Farmland rent, like apartment rent, has gone up. So how does that affect a farmer's bottom line? We're joined by Kent Thiesse. He's a farm management analyst and senior vice president for MinnStar Bank. Hey, it's good to talk with you again, my friend. How you been?

Because if you've got to buy or rent the land, right now, it's very costly and, of course, interest rates have doubled since the beginning of the year on financing. And we just talked about rental rates. But then, you also got the cost, if you're going to raise crops, you need machinery.

And if you can't afford to buy the machinery, then you've got to hire somebody to custom apply, and plant and apply the products, and harvest. And then, of course, you got the input costs. So it's very difficult to start from scratch.

I guess if somebody was going to try to do that, their best option is probably to find something where they can some value-added, either specialty crops, raising organics, raising specialty, maybe cheeses, livestock products, meat products, where you can garner a little more income off relatively small acreage or small amounts of livestock that you're raising.

But those are kind of niche opportunities. That's not something everybody can go out there and do. And you got to have an end market for whatever you're raising to sell it.

INTERVIEWER: So Kent, then, as we're talking about rising rental rates, farmland rental rates, how does that work into just, say, the costs for food? Like, let's just take it maybe-- for instance, I don't know, someone's farming soybeans, right? So can you work out what would happen if, as your rental rates start going up, how does that affect, say, what we're paying in the stores?

KENT THIESSE: There's probably not a lot of direct correlation. Obviously, the big impact comes to the farm operation itself. If we look at the combination of rising rental rates with rising input costs for fertilizer, and seed, and chemicals, and fuel, and interest rates, labor costs, everything, looking at next year, it's probably going to cost the typical farmer 5 and 1/2 to $6 a bushel to raise corn at their normal yields.