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.”