Creative Land Acquisition Strategies for Dairy Producers

In today’s competitive agricultural landscape, land values and cash rent remain key concerns for farmers and dairy producers. With farmland prices continuing to fluctuate and rental rates remaining steady, understanding market trends is crucial for making informed financial decisions.

Compeer Financial team members, Curtis Gerrits, senior dairy lending specialist, and Jade Kruschke, appraisal regional manager, recently joined Peggy Coffeen on the Uplevel Dairy podcast to discuss land values, rental trends and innovative land acquisition strategies for dairy producers.

Additionally, farmland rental rates have remained relatively stable over the past three years:

• 2022: Average rent was $269 per acre
• 2023: Increased slightly to $285 per acre
• 2024: Averaged just under $300 per acre

While rental rates vary based on land quality and location, overall, the market has remained consistent.

How Lower Commodity Prices Could Impact Land and Rent Values

With lower commodity prices projected for the near future, both land values and rental rates could be affected. However, land sales are not slowing down significantly, though buyers are exercising more caution.

High-quality farmland continues to attract strong demand, while lower-yielding or less strategically located parcels may stay on the market longer. Competition and location remain key drivers in farmland pricing.

Creative Strategies for Land Acquisition

Not every dairy producer can afford to pay top-dollar for land. Several alternative strategies exist to secure land access without breaking the bank:

1. Leasing Instead of Buying – Some dairy producers opt to lease rather than buy farmland, reducing upfront capital investment while still securing necessary resources for manure application, cropping and feed production.
2. Land Purchase with Lease-Back Agreements – In certain cases, dairy producers buy land and lease it back to row crop farmers. This allows them to maintain control while generating rental income.
3. Land Contracts for Deed – In this arrangement, the seller acts as the lender, structuring payments over time to reduce immediate tax burdens while making land acquisition more manageable for buyers.
4. Building Relationships with Neighbors – Being a good neighbor can pay off. Open communication with landowners ensures that if they decide to sell, you are top of mind as a potential buyer.
5. Purchasing Crops Instead of Land – Some dairy producers forego direct land ownership in favor of purchasing crops from local growers. This strategy allows for reliable feed supply while avoiding the high costs of land acquisition.

Considerations for Farmers Looking to Buy or Rent Land

If you are considering expanding your land base, remember to:

• Know Your Financing Options – Understanding various lending structures, rental agreements and crop purchase strategies can give you an edge in negotiations.
• Ensure Operational Excellence – Many landowners prefer renting or selling to those who manage land responsibly. Maintaining high-quality fields can make you a preferred tenant or buyer.
• Strengthen Your Financial Position – Ensure you have a solid balance sheet before negotiating land purchases or rental agreements. Sellers often favor buyers who are financially prepared.

As farmland prices remain strong, dairy producers must think strategically about land acquisition. Whether through leasing, creative financing or strengthening relationships with neighbors, there are multiple ways to secure access to high-quality land.

For farmers looking to make informed decisions, Compeer’s appraisal team offers expert insights on land valuations and market trends. And our specialized dairy team can help you explore options tailored to your operation.