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Land rents might not move lower with prices

The chief agricultural economist at Wells Fargo says farmers and landowners should be having conversations about next year’s rental rates.

Michael Swanson says land rents might not be lower.

“If you go back and look at the historical data about what share of that revenue in the field is for the landowner and which share is for the farmer, that’s a more important question. Just because corn and soybean prices are down doesn’t mean cash rents should come down.”

Swanson says flexible farm leases can be a good compromise.

“There’s a base, because landowners have living expenses and property taxes to pay. In a bad year when prices come down, there’s not as much to give away at the end of the year.”

He says flex farm leases are also fairer in terms of risk and upside opportunities for both parties. 

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