Ryan Allemann's alfalfa acrage has declined as landlords no longer want to contract out their land for more than two years.
Ryan Allemann will reduce hay acres again this year as favorable land-rental terms become increasingly hard to come by.
Last year, the Wayne, NE, grower devoted 240 acres to alfalfa production. This year, he’ll trim that back to just 80 acres. Six years ago, he was harvesting hay on 900 acres.
“The landlords in our area don’t want to get into long-term leases anymore,” says Allemann, who markets most of his hay in 3 x 4 x 8’ bales to Ohio dairies.
“Most of them only want to do a two-year lease. With the dynamics in agriculture changing so fast right now, they’re afraid going any longer will put them behind on what they could be getting in cash rents.”
For alfalfa, Allemann says, a short lease period simply doesn’t make sense. “I figure a stand of alfalfa has to last four to five years to make it pencil out economically. You have all that investment in the seeding year. Then if you lose the ground after the second year, you’re basically out of luck.”
Rental rates are rising, as well. Currently, dryland ground in his area is renting for close to $300/acre. Average rent for irrigated ground is $500-600/acre. “Some is going for as high as $800/acre. And it just keeps going up every year.”
He doesn’t expect the situation to improve any time soon. “About the only thing that would change it would be if corn prices were to go down sharply. Cash rents would stabilize, and landlords might be willing to write a little longer-term lease.”
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