Rented! To the highest bidder

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From The Globe Gazette – Mason City Iowa

MASON CITY – Most high bidders at land auctions will come out the door with acreage to call their own.

But successful bidders at a land auction Saturday in Mason City left with a lease.

The Charles E. Lakin Cash Rent Auction at the Clarion Inn in Mason City provided 15 parcels totaling just over 2,200 acres upon which the highest-bidding tenants won the right to farm the land.

There was plenty of interest. Some 300 bidders were registered, with more attending who were curious about the relatively new type of auction.

Successful bidders paid some hefty per-acre rents. The average lease price per acre was about $460. The range for the day was $325 to $520 per acre. All leases were for two years.

At auction’s end, more than $1 million had been bid in rents.

And that was pretty much in line with what earlier auctions were getting, said Korrina Hughes, who clerks for her husband’s auction business. Al Hughes Auction of Glenwood was the service conducting Saturday’s sale.

Earlier in the week, the Lakin family held similar sales in Hardin, Guthrie and Mitchell counties.

“The market is changing so fast; we didn’t feel the leases were keeping up,” said Charles Lakin Jr.

Lakin’s father, Charles E., owns the parcels. Charles Jr. represents his father’s interests.

“He is going to be very interested in how his went today,” he said.

The market volatility prompted the family to put the cash rents to auction – a first for his father, Lakin said.

It took about two hours to establish rents for the parcels, located in Butler, Cerro Gordo, Franklin and Hancock counties.

A descriptions of inputs was given for each tract before the bids. Inputs are things like manure and fertilizer that have been worked into the ground – and which increases its value.

Then, one round of non-binding bidding takes place. In that preliminary round, everyone gets a feel for where a lease will be set. The highest bid becomes the starting price for the second round that establishes the real rent.

More often the bid climbs in the second round but in two instances on Saturday it stayed where it was.

“Most (leases per acre) were a good $200 higher than what I pay in Cerro Gordo County,” said one farmer, who declined to give his name.

There is a fear, he said, that other rents will be forced upwards.

“With these numbers I don’t know how those farmers are going to make it, paying those kinds of prices.”

But others said increased rents are probably more in line with the rising value of land.

“I come from a family of farmers and I am kind of torn sometimes,” said Hughes, adding that she can understand being both owner and tenant.

“But we also haven’t seen land selling for $16,000, $17,000 per acre like we’ve seen recently, either,” she said.

She added while the auction company has not done many cash rent auctions, the number was growing.

She said farmers attending the auction were well-versed on each farm. She believed farms acreages that rented high did so for a reason – and the lesser quality land resulted in cheaper leases.

“They were very much in line” with what they should have commanded, she said.

Well, to a point, said another farmer – who also declined to given his name – who said everything depended on which side of the dollar you stood on: The one paying the dollar, or the one getting the dollar.

“I know this,” he said. “I am going to have a long, long talk with my tenants.”