What is in this article?:
- Returns, Cash Rents at $4.80 Corn Price, $10.75 Soybean Price
- Comparison to Recent Average Cash Rents
- Operator and Land Returns for Differing Prices
Prices in the high $4 range for corn and high $10 range for soybeans are being projected for next year. Much more will be known about price levels once clearer expectations of 2013 corn and soybean yields are reached. If prices are in the high $4 range for corn and $10 range for soybeans, returns will be lower than in recent years. As a result, cash rent levels may need to be re-evaluated, particularly for situations in which the current cash rent is above average.
Comparison to Recent Average Cash Rents
On April 9, a farmdocdaily post released estimates of 2013 cash rents on professionally managed farmland based on a survey conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers. The midpoint cash rent is $396/acre for excellent qualify farmland with corn yield over 190 bu. The $396/acre cash rent is above the $333 operator and land return calculated above for high productivity farmland with a 195bu./acre expected corn yield.
The Illinois Society reports a 2013 midpoint cash rent of $339/acre for farmland with corn yields between 170 and 190 bu./acre. Low-productivity farmland with a 183-bu./acre yield has an operator and land return of $291 per acre (See Table 1). Similar to high-productivity farmland, the current cash rent of $339/acre is above the $291/acre operator and farmland return.
The Illinois Society reported a 2013 midpoint cash rent of $285/acre for farmland with expected yield between 150 and 170 bu./acre. In the calculations above, lower-productivity farmland with a 160-bu./acre corn yield has $211/acre of operator and land return (see Table 1). Similar to the higher-productivity class, the $285/acre cash rent exceeds the $211 operator and land return.
Professional farm managers tend to have above average cash rents. The USDA reports average cash rents by county (see this farmdocdaily article for a map). A number of these average cash rents are near the above-calculated operator and land returns, particularly in central Illinois. For example, average cash rent is $324/acre in Sangamon County, $326 in Macon County, $313 in Logan County. These averages are only slightly below the $333/acre operator and land return for high-productivity farmland. Given that there is a wide range of rents summarized in an average county cash rent, there likely are a large number of cash rents above the operator and land returns shown in Table 1.