Record cotton prices are bringing multiple bidders with significantly higher price offers for some farmland leases in Maricopa County, Ariz.

“We have seen significant trends for any lease becoming available for bidding by multiple parties trying to get a hold of land to grow cotton this year,” says Charles Havranek of Southwest Land Services, LLC in Goodyear, Ariz. 

In the Arlington Valley in western Maricopa County, a farmer received a cash rent bid of $260 per ace on a three-year lease. The typical land rental rate in the valley has ranged from $150 to $175 per acre for decades.

“The farmer (landowner) turned down the $260 per acre rental offer,” Havranek said. “Cotton at these (high) prices has created a tremendous kick up in bidding for rents.”

Havranek was among seven Arizona farmland specialists who discussed 2010 farmland values and rental rates during the American Society of Farm Managers and Rural Appraisers Arizona Chapter’s Spring Ag Forum in Tempe, Ariz., in late February.

With record cotton prices, Havranek says some alfalfa growers are pulling out two-year stands to grow cotton. Higher water costs in several central Arizona irrigation districts is another reason for the switch since farmers can grow cotton with less water than alfalfa.

“Into early 2011, we are observing a trend of increasing prices for farmland cash rental rates in Maricopa County in most areas, especially those areas with the lowest water costs,” Havranek said. “Due to urban development of crop land, rental rates have shown some increases as tenant farmers compete for smaller supplies of available farmland.”

Yuma County

2011 is shaping up to be a good year in Yuma County, says Bill Moody of Robert J. Moody and Associates in Yuma. Agriculture generates 40 percent of Yuma County’s economic base. Vegetable production generally drives farmland values and lease prices.

“There were more farm sales in 2010 than the two previous years combined,” Moody said. “I am optimistic. Things are looking better than a year ago overall. It’s shaping up to be a good year.”

Farmland prices have not increased, per se, but higher commodity prices in farmers’ pockets are driving more land purchases.

“It doesn’t mean farmland is flying off the shelf,” Moody told the crowd. “Some farms which sat on the market for several years have been purchased by a neighboring operator or lessee.”

Moody’s breakdown for farmland values and rental rates includes:

Upper Yuma Valley: stable farmland values from $20,000 to $26,600 per acre, plus stable annual $600 to $800 per acre cash rent;

Lower Yuma Valley: $19,000 to $23,000 per acre value (decline) - $500 to $725 per acre rent (stable);

North and south Gila Valleys:  $18,000 to $26,500 per acre (stable) and rent from $600 to $800 per acre (stable);

Yuma Mesa districts: $14,000 to $20,000 per acre (decline) - $100 to $175 per acre rent (stable);

In the Wellton-Mohawk Irrigation District: Dome Valley - $20,000 to $25,000 per acre value (stable) and $500 to $750 per acre rent (stable); Wellton area - $12,000 to $18,000 per acre (decline) and $300 to $550 rent (stable); Roll area - $9,000 to $13,000 per acre (stable) - $250 to $450 per acre rent (stable); Texas Hill - $7,000 to $10,000 value (decline) - $250 to $300 per acre rent (stable); and Wellton Mesa - $5,000 to $8,000 per acre (decline) and $175 to $225 rent (stable).