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Variable cash rental agreements gaining popularity

The Illinois Society of Professional Farm Managers and Rural Appraisers says variable cash rental agreements are gaining popularity.

Luke Worrell, chair of the organization’s Farmland Values & Lease Trends Committee, says the group’s mid-year survey shows 35% of leases in the state are now variable cash agreements.

“There are countless ways to construct them.”  He says, “The vast majority of flex leases have what’s called a base rent, which is a guarantee that’s paid regardless of price, yield, or any other factor. There’s also some sort of bonus structure tied into actual farm production.”

He tells Brownfield respondents say the agreements work well for both the farmer and landowner.

“The growers who had cash rents for this season negotiated those in October or November of 2023.”  He says, “It looks a lot different now than it did then, and so flex leases try to capture what actually happened.”

Worrell says the group expects the use of variable cash agreements to continue to grow.

A full summary of the survey results can be found HERE.

AUDIO: Luke Worrell – Illinois Society of Professional Farm Managers and Rural Appraisers