News

Fixed cash rents declining marginally

A farm management specialist says fixed cash rental rates have not been declining as rapidly as net farm incomes.

Dale Lattz with the University of Illinois tells Brownfield Illinois farmer surveys show fixed cash rents have dropped about $25 per acre each year over the last four years.  “The cash rents have come down about $100 an acre higher than what we’ve seen the next farm incomes per acre, so even though they have come down, they’ve not come down to the same degree and speed as farm incomes have come down—which is to be expected, but the magnitude is a little bit surprising.”

Lattz says if farmers have an opportunity to renegotiate cash rents they might want to consider a variable rental agreement.  “That’s going to be somewhat closer to what the actual earnings are for that year on the farm, and it can benefit both sides.”

He also suggests farmers have open communication with landowners and provide them with a yearly review of the economics of farming their land.

AUDIO: Interview with Dale Lattz