Source: Nick Paulson, Department of Agricultural and Consumer Economics, University of Illinois

Since 1990, the average cash rent in Illinois has increased by about 70 percent from $100 per acre to $169 per in 2010 according to USDA's Agricultural Land Values and Cash Rents Annual Summary.

Over the same twenty year period, both crop revenues and non-land production costs for grain operations have more than doubled. These trends have been most pronounced over the past 5 years due to the significant rise in both agricultural commodity and energy prices.

The increasing levels of cash rents are an issue of primary concern for farmers in Illinois and throughout the Corn Belt region. According to University of Illinois crop budgets, land costs have represented 30 percent to 35 percent of total production costs for Illinois grain operations over the past six years. Despite consistent upward trends in cash rent levels, this actually represents a decline in similar measures from the early 90s.
A number of factors have been found to impact rent levels beyond the expected profitability of crop production. Rent levels tend to exhibit a benchmarking effect based on their levels from previous crop years, which tends to slow rental rate adjustment.

Farm size is positively related to the cash rents paid by Illinois farm operators. While this implies economies of scale, the difference in average cash rent levels reported by small and large grain operations is relatively small. Significant increases in commodity futures prices throughout this fall suggest that expectations are for cash rents to continue to increase at least over the short-term.

Furthermore, over the past decade there has been a shift away from share rental agreements to cash rent arrangements in Illinois. The average proportion of total acres that are operated under a share rent agreement has fallen from about 48 percent in 1997 to 37 percent in 2009. Over the same time period, the proportion of total acres operated under cash rent agreements has increased from just over 25 percent to approximately 40 percent, while ownership rates among grain farm operators have declined slightly from 25 percent to about 23 percent.