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Does More Corn Mean Higher Cash Rent?

May 22, 2014
corn field farm

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Does what you grow affect what you're paying for land?

By Brandy M. Krapf, Dwight D. Raab and Bradley L. Zwilling, University of Illinois

In an article last month, we reviewed the return and cost advantage as the corn enterprise on a farm increased in intensity. The intensity of the corn enterprise is measured by corn acres relative to tillable acres and expressed as a percentage. This article continues that thought and delves into cash rent and cash rent acres for the five groups of farms over the five-year period.

This article uses data spanning five years (2009-2013) from a group of central Illinois farms operating on higher productivity soils that are members of the Illinois Farm Business Farm Management Association. All revenue is attributed to the accrual method of accounting netted against the total economic expenses associated with the production of that revenue to arrive at accrual based management returns.

For each of the five years, the farms were sorted into one of five groups based on the percentage of acres devoted to corn production. The five groups are:

1) Over 75% Corn Acres

2) 66% to 75% Corn Acres

3) 56% to 65% Corn Acres

4) 46% to 55% Corn Acres

5) Less than 46% Corn Acres

The group of farms with the least amount of land devoted to corn production, the Under 46% group, reports a minimum of 30% cash rented acres (2009) and a maximum of 32% cash rented acres (2012, 2013) (see Table 1). The group of farms with the greatest amount of land devoted to corn production, the Over 75% group, reports a minimum of 44% cash rented acres (2013) and a maximum of 58% cash rented acres (2010). 2010 had the largest variance in percent cash rent acres of 27%(58%-31%). This difference has been decreasing since 2010. It is also interesting to note that the range from minimum to maximum cash rented acres increases as the percentage of corn acres increases.

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