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Economics say cash rents should decline in 2025

An agricultural economist at the University of Illinois says farmers and landowners need to be having serious discussions about cash rents.

Gary Schnitkey says the economic downturn has made profitability on rented acres hard to pencil out.

“Cash rents have risen quite considerably in the last couple years, particularly since 2020.”  He says, “Getting them back to 2020 levels isn’t going to get us to profitability, but it’s a start.  Cash rents on this rented land is going to be difficult to justify from the return that we’re getting.”

For example, Schnitkey says cash rents in Illinois have risen on average $40 per acre since 2020.  He tells Brownfield the economic fundamentals show cash rents should be trending lower this year, but…

“That’s going to be very hard to do obviously, because landowners don’t want to see their return decline,” he says.

Schnitkey says most farming operations plan for down years, but the situation still brings tough questions.

“If you can’t get them down this year, begin that discussion, and then begin questioning.”  He says, “If you have some high-priced farmland question whether or not this is a worthwhile adventure at all.”

Schnitkey says open and direct communication between tenant and landowner is the best approach toward negotiating rental agreements.

AUDIO: Gary Schnitkey – University of Illinois