Why Cash Rent Trends Are Sluggish


With farm budgets tightening once again for 2016, cash rent is one of several possible places to cut. But are farmers walking away from these negotiations with a better deal?

Maybe not, according to the latest Farm Journal Pulse poll. When nearly 800 farmers were asked about whether their cash rents would go up, down or stay the same in 2016, only 16% say they’re anticipating a drop. A small amount (6%) say they’re expecting higher cash rents in 2016, with the majority (67%) of cash rents remaining unchanged. Another 12% responded that they do not rent ground.

These poll results mirror a 2014 Pulse poll that asked the same question. In 2014, 17% of respondents expected lower cash rents, 8% higher and 63% about the same, with 12% reporting they do not rent ground.

Steve Bruere, president of People’s Company, says he sees cash rents softening in his home state of Iowa.

“It’s definitely moving in the right direction,” he says.

At the same time, it’s hard to walk away from ground that’s perceived as too expensive, Bruere says. It’s difficult to adjust fixed costs – plus, the move is often a permanent one, he says.

“You don’t want to give up acres because you’re never getting those acres back,” he says.

Purdue University ag economist Michael Langemeier says even if landlords are reluctant to reduce cash rents, farmers still need to start the conversation with them.

“Net returns are likely to remain below breakeven for another three years,” he says. “With some landlords, it may be possible to discuss share rent or flex rent arrangements. These arrangements would provide benefits to landlords if gross revenues do spike.”

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Spell Check

Kearney, NE
11/30/2015 06:08 PM

  I have never understood why anyone would farm for fun. Every expense item should be on the table in these trying economic times, and all that we deal with should participate in the lower prices. If this down turn lasts a few years, they all will be forced to eventually take less, maybe much less, for what they provide. Common sense would dictate that our input suppliers (including landlords) would help out a little now instead of waiting until many go broke and their prices drop like a rock. But common sense is usually in short supply and greed rules.

Lyons , NE
11/30/2015 08:27 PM

  Cash rent 200/A and seed is $85/A. Deduct $70/A for property taxes and the land owner is not getting much more than the seed guy, which is crazy! Seed, fertilizer, machinery and the rest of farming inputs need to come down in line with grain prices. I don't see many articles about asking your seed dealer for a break in price...seed only increase 167% since 2006.

Jordan, MN
12/1/2015 12:39 PM

  Unfortunately, most farmers don't have any leverage compared to the seed company - particularly the large multi-nationals. The reality is that land is over-valued (hence the property taxes being $60+/ac) and rents $200+/ac. One needs to try and be as objective as possible and let expensive land go. Otherwise a farmer risks getting sucked into bankruptcy trying to survive an extended downturn.


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