June 4, 2024
Solar companies are offering many farmers more than $1,000 per acre for land leases, survey shows
By Tyne Morgan
Purdue Center for Commercial Agriculture producer survey graph via Farm Journal
Solar companies need a tremendous amount of open land to achieve their installation goals, which means asking farmers for acreage leases. "A survey of farmers shows the majority of farmers are being offered more than $1,000 per acre by companies for solar leasing, which could also drive up the price of cash rental rates," reports Tyne Morgan of Farm Journal. "As the Biden administration works to accelerate their 'clean energy' plan across the U.S., land is in high demand, especially for future solar projects."
Michael Langemeier, an agricultural economist with Purdue University, says the Ag Economy Barometer is revealing "the sticker shock of solar leasing rates," Morgan writes. "The survey of 400 agricultural producers is now asking farmers how many have actively engaged in discussions with companies about leasing farmland you own for solar installation, and the response was surprising."
April's survey showed a substantial increase in the number of farmers who engaged in talks with a solar company representative over the past six months. Morgan reports, "In April, 19% of farmers said they’ve had discussions, up from 12% in March. The bigger surprise may be in the high rates solar companies are offering farmers."
According to the survey, 58% say the rates were more than $1,000 per acre. Survey percentages were tallied for the entire U.S., but the offers ranged from around $750 in the Great Plains to more than $1,200 in the eastern Corn Belt.
While top-dollar solar lease prices may offer a good return for landowning farmers, the cost of cash-rent agreements will also increase. Langemeier told Morgan, "That's going to put upward pressure on cash rents, and it's probably going to put upward pressure on land values, given that it's local. . . . And so it probably impacts a fairly local area, depending on whether your area has solar leasing or not, but it certainly has pretty wide ramifications on what's going on in agriculture.”
Crop prices that don't meet production inputs also tempt farmers to consider solar leases.