UBLY, Mich. — Farmers will take a look at land prices during “Land and Land Rent: Where We Are At and Why” during Thumb Ag Day on Dec. 14.

Presented by Michigan State University extension district farm management educator Dennis Stein, the program will explore changes in land values and methods farmers can use to assess how much they can afford to pay when renting or buying land.

“We will talk about land values and how they correlate to purchase prices and land rents,” he said. “We are trying to balance out the whole idea of return on investment and how much return is available for land rents and land purchases.”

Using a variety of scenarios, Stein will consider overall debt load, soil types, soil conditions, specific farm payments and other factors that must be taken into consideration when determining how much is too much to pay for land.

“There will be some matrix-type answers, such as this is what you can afford to pay if commodity prices stay the same,” he said. “But, it has a lot to do with the overall farm management and what the overall financial position of the farm is.”

Stein said he will discuss examples that deal with average expenses and land values. He said determining how much a farmer can afford to pay for land comes down to each one’s situation.

“You really have to look at your particular situation and evaluate it on that basis,” Stein said.

He said scenarios may vary dramatically from cash crop growers to livestock producers, to dairy farmers. “Different factors play into the formula based on the farming operation,” he said. “Every rule gets thrown out. Each position is different. This is not a cookie-cutter decision. With the variety of farms, each of those creates their own set of parameters when making these decisions.”

Other factors that influence the farm’s bottom line and impact financial decisions regarding land costs include looking at the farm’s capacity – whether it has resources it is not using to their full potential, such as equipment, facilities or personnel.

“Some farms have capacity that they are not fully utilizing,” Stein said.

For example, some farms may have the ability to take on more acres because they already have the resources necessary to handle increased acreage, such as equipment and personnel.

“Livestock operations have a different perspective on what they are willing and able to pay when purchasing or renting land, than a cash crop producer,” he explained. “They need to be in a geographic area that is relatively close to their livestock operation.

“They have to consider distance for backhauling products such as manure and other byproducts that need to be put back into the system. That is a huge factor, whereas a cash-crop operator does not have that concern.”

Stein said long-term impacts of controlling assets and dealing with risk is becoming more important as farmers consider acceptable land rent and purchase prices. “Long-term, we have to keep farmers viable and they need to be able to manage risk,” he said.

Stein’s presentation will include an opportunity for participants to ask questions.

Thumb Ag Day will be at Ubly Heights Country Club, 2409 E. Atwater Road. Stein’s session will begin at 9:15 a.m. and admission is free.