The University of Illinois studied average cash rents and compared those to professionally managed cash rents. The following is directly from farmdoc daily (farmdocdaily.illinois.edu) by the Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign, April 1, 2014.
Cash rents on professionally managed farmland differ from “average” cash rents in at least two respects. First, professionally managed cash rents are higher than average cash rents. In 2013, professionally managed cash rents were $73 per acre higher than average cash rents reported by the National Agricultural Statistical Service.
Second, cash rents on professionally managed farmland increased faster than average cash rents between 2006 and 2013. During this period, agricultural returns were relatively high, thereby supporting higher cash rents. Professional farm managers likely were more aware of the market conditions, leading to higher cash rents on professionally managed farmland. The decline in 2014 cash rents on professionally managed farmland may have resulted because of lower commodity prices occurring since summer of 2013, signaling lower returns in 2014 and the need to adjust cash rents downward.
The findings of the University of Illinois indicate the value of professional farm managers.
- We keep abreast of the rapidly changing profitability of farming. Grain prices, crop yields, and cost of production are analyzed to project profits.
- We follow the market for cash rents. Knowing what farmers are willing to pay in the competitive market to lease farmland is important in the landowner’s decision to set cash rent terms.
- We are quick to adopt changing economic conditions and can rapidly and dramatically change the lease terms based on market conditions.
- We make sure the farm productivity is maintained requiring fertilizer and limestone applications in the written lease.
WHAT IS AVERAGE?
Average rental information is a good base to begin the discovery process of what is right for your farm. Each farm is unique in its soil’s productive capacity, farmability (size and shape), location, drainage, grain markets, cost of production, potential for government support, yield history, crop insurance levels, etc.
The average rent stated in the table is made up of individual rents that are more than $100 per acre higher or lower. There is a tremendous amount of variability within these range averages.
Owner’s goals and objectives are followed. As
your agent, we keep you informed of the rapidly
changing economic conditions and develop a lease
to meet your needs and desires.
We can choose from:
- Cash rents that are aggressive
- Cash rents that are average
- Variable cash rents with lower base and a bonus based on actual profitability
- Crop share
- Crop share with bonus
As professional farm managers, we analyze your specific farm and situation. We are your agent and provide lease analysis without conflict of interest. Please feel free to contact us regarding your farmland questions.