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Avoid Rent Squeeze

September 4, 2009

Initial projections for 2010 crops aren't painting a pretty picture. Iowa State University's farm management team pegs the cost range from $610/acre on low-yield ground for corn following corn to $738/acre on
better acres with higher expectations.

With early estimates of $3.85/bu. for a national average cash corn price this marketing year, higher-producing ground will need to yield 191 bu./acre to break even. Bump rent by $100, a realistic number in many cases, and you're looking at a necessary yield in excess of 217 bu./acre before money goes back in the bank.

Farmers are also seeing these numbers, and it has them concerned. Compared with survey comments of the past two years, those in this survey have a significantly more cautious tone, and many even have an edge of fear and anger.

Most expect rental rates to hold steady next year, if not drop, according to an early August survey of almost 900 Top Producer readers. Many of those readers are going back to landlords to attempt to negotiate new lease terms, and more are turning to flexible lease arrangements.

By the Numbers  I  Percentage of Top Producer readers who use certain lease strategies....

> 12.8  expect to farm more in 2010

> 2.9 will plant fewer acres

> 52.5 rent at least half of their acres

> 39.5 of renters are total cash rent

> 93.8 have a $250 or less base payment

> 20.5 who use flex leases plan to increase these acres in 2010

Top Producer, September 2009

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FEATURED IN: Top Producer - SEPTEMBER 2009

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