Dire farm income forecast encourages more Indiana growers to think about solar

CLARK COUNTY — When Max Zimmerman first received brochures and postcards urging him to lease some of his farmland for solar projects, he laughed and threw them in the trash.

“It just didn’t make any sense to me,” he said. “I’ve never heard anything about solar energy. To me it sounded like some kind of fraud.

Fast forward to today, and the former Clark County farmer now has a 500- to 600-acre contract with two solar developers for pending projects — and he couldn’t be happier.

Zimmerman will make much more in those lease payments than what he makes renting the land to other farmers, he said. It is also a guaranteed income for the next 30 years.

“When they came to us with leases about four times the amount we get in cash rent, it made sense,” he said.

Zimmerman is not alone. More farmers and landowners than ever say they are actively talking to solar companies about land leasing, according to Purdue University’s latest agriculture barometer released earlier this month.

The survey found that 20% of U.S. farmers had participated in such discussions in the past six months, up from just 10% in February. This is the highest number since the question began being asked in 2021.

Jim Mintert, director of the Purdue Center for Commercial Agriculture, which oversees the agriculture barometer, said there is a simple answer to the recent surge in interest: money.

Solar developers are offering higher land lease rates to attract farmers to contracts as demand for alternative energy grows. In 2021, 27% of farmers said leasing agents offered at least $1,000 per acre. Over the last two months, over 55% of farmers reported receiving the same offer.

This comes as farm profitability is expected to decline by 25% this year and U.S. growers will earn $40 billion less than last year, according to the U.S. Department of Agriculture’s latest farm income forecast.

This is the largest year-on-year decline in the value of the dollar in history. The decline is due in part to declining grain prices combined with inflation-related spikes in the costs of fuel, fertilizer, equipment and other farm essentials.

Add to that that more and more Indiana farmers are considering leasing property for solar projects, trying to offset what will likely be dismal profits this year, Zimmerman argued.

“They look at all this and say, ‘If I could take 25% of my farmland and develop it into something like this and have a steady income for 30 years, my bank would like it and my family would be better off down the road. road,” he said.

Andy Tauer, director of public policy for the Indiana Farm Bureau, said Hoosier farmers saw an increase in activity in the spring from solar companies looking for landowners to lease their land.

He agreed that higher leasing rates are generating more interest in solar, noting that high-end deals are currently much higher than the average return on corn and soybeans.

“Given the current economic outlook, a lot of it is driven by the company’s finances,” Tauer said.

But whether the piqued interest from Hoosier landowners actually translates into more farmland being contracted for solar energy remains a question mark, Mintert and Purdue explained.

Although long-term land leases must be filed with counties, no one monitors those leases statewide, he said. This makes determining the impact of the recent push by solar companies difficult to calculate.

“We thought about collecting this data, but getting it is not an easy task,” Mintert said.

In and around Clark County, Zimmerman said more landowners are talking to solar companies and learning about the benefits of renewable energy sources.

Farmers who do not have children and want to take over this business can lease land for solar projects to ensure further income in the future, he noted. That’s the main reason Zimmerman decided to register – to protect the land that has been in his family for over 100 years.

“I look at the benefits for my children and their families,” he said. “We know that 30 years from now, when the lease expires, there will be farmland here that may not have existed without solar energy.”

It’s unclear whether farmer interest will remain high, but it seems unlikely it will decline in the coming years, Farm Bureau’s Tauer noted.

Federal regulators continue to issue more mandates to utilities to diversify their energy portfolios with renewables while offering lucrative tax incentives for solar projects.

Meanwhile, companies such as Meta, the owner of Facebook, have also committed to using only renewable energy in their production and services by 2030. The company is building a massive $800 million data center in Jeffersonville, near Zimmerman’s land.

All of this is creating a strong demand for more solar energy and more farmers willing to lease their land to make these projects a reality, Tauer explained.

“I think interest in this technology will continue to grow, both from consumers, landowners and utilities,” he said. “I fully anticipate that we will continue to have these conversations in many of our communities throughout Indiana.”