Cash rents on professionally managed farmland projected down

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

Recently, the Illinois Society of Professional Farm Managers and Rural Appraisers announced 2014 cash rents on professionally managed farmland. Overall, 2014 cash rents on professionally managed farmland are projected to be lower than 2013 rents, perhaps signaling a move to lower cash rents in broader categories of farmland in 2015.

Professionally Managed Cash Rents

The Illinois Society announced cash rental estimates at a Land Values Conference held in Bloomington, Illinois on March 20th. Presentations made at the conference are available here.

The Illinois Society provides mid-point estimates of cash rents for four farmland categories:

  • Excellent quality farmland -- expected corn yields above 190 bushels per acre,
  • Good quality farmland -- expected corn yields between 170 to 190 bushels per acre,
  • Average quality farmland -- expected corn yields between 150 to 170 bushels per acre, and
  • Fair quality farmland -- expected corn yields less than 150 bushels per acre.

For excellent quality farmland, mid-point cash rent decreased from $396 per acre in 2013 to $375 per acre in 2014, a decrease of $21 per acre (see Table 1). Other cash rent categories had similar decreases. Cash rents on good quality farmland declined from $339 in 2013 to $323 in 2014, a decrease of $16 per acre. Average quality farmland rents decrease from $285 in 2013 to $277 in 2014, a decrease of $8 per acre. Fair quality farmland decreased from $235 in 2013 to $219 in 2014, a decrease of $16 per acre.

Commentary

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 (see here for more details). 

click image to zoom 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 market conditions than typical land owners, 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.

Because of these differences, a decrease in professionally managed farmland in 2014 does not indicate that the average cash rent on farmland will decrease in 2014. Because of lagged relationships between agricultural returns and cash rents, average cash rents may not decrease. In fact, it is possible that there will be modest increases in the average cash rents for 2014 released by the National Agricultural Statistical Service in September of this year.

However, 2014 decreases in professional cash rents may signal a broader decrease in cash rents moving into 2015. Average cash rents may decreases, particularly if commodity prices are low. Corn prices below $4.00 per bushel likely will lead to larger decreases in cash rents while prices nearer $4.50 per bushel will lead to more modest decreases.

Summary

Decreases in 2014 cash rents on professionally managed farmland result from much lower corn and soybean prices since the summer of 2013. If corn prices remain in the low $4 per bushel range, average cash rents may decrease in 2015. Even with projected 2014 cash rent decreases, cash rents on professionally managed farmland will have to decrease further to match agricultural return levels associated with lower commodity prices.


Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...


Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


Smooth Wall Grain Bins

Meridian’s SmoothWall bins are the ultimate storage bins, used to handle and store fertilizer, grain, feed and seed, and extend ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form