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SE MN | Cash rent is a free market, though not a transparent one. As such, it shouldn't be adjusted for inflation directly but one would expect it to follow to some degree. Rent "should" be priced based on what the market will bear regardless of cpi. When corn ethanol caused land values to skyrocket, I assume the landlord wasn't worried about cpi. If ethanol and meat were to be outlawed, the landlord would not have the luxury of worrying about cpi as his renters went out of business and his asset value dropped by 80%.
The fundamental conflict in this market is that the typical farmer, or at least the most aggressive are willing to pay over market rate to gain marginal acres but his business model is based on paying below market for his existing land base, so he can't afford to have all of his land reprice to "market" every year, so it is a constant battle between gaining new land without inflating the cost of existing land. | |
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Should landlords be adjusting their rent for inflation.
