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Angie Peltier


Angie Peltier
Former Extension Educator, Commercial Agriculture



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Hill and Furrow

Current topics about crop production in Western Illinois, including field crops research at the NWIARDC in Monmouth.
Figure. County average cropland cash rental rates (for non-irrigated land) for 2016 and compared to 2014 (the value within parentheses) (Data source: USDA-NASS).

Deadline Looms for Many Land Leases: Did Falling Rental Rates Between 2014 and 2016 Ensure Farm Profitability?


Cash rents: Popular topic in county Extension offices. By and large, the number one questions fielded in rural county extension offices relate to land rental rates. As many of the 2016 cropping-year leases are currently under review for 2017, many farmers and land-owners are currently negotiating land lease terms for the 2017 growing season. Rather than relying on strictly-verbal rental agreements, written lease agreements can help both landowners and farmers to keep clear the terms of the agreement. (See resource list below for generic rental agreements.)

2016 average county cash land rental rates. In September the UDSA-National Agricultural Statistics Service released the average county cash rental rates for 2016. By and large, for counties in Western Illinois, the 2016 average cash rental rates fell from 2014 averages (Table, Figure).

Table. Average county cash land rental rates in 2016 and the difference in rental rates between 2014 and 2016 (data source: USDA-NASS)

Average cash land rental rate

Average cash land rental rate

County

2016

Change from 2014

County

2016

Change from 2014

In $/acre

In $/acre

Fulton

204

-31

Mercer

203

-21

Hancock

220

-20

Peoria

221

-17

Henderson

214

-37

Rock Island

221

-19

Henry

230

-8

Schuyler

197

+11

Knox

227

-37

Stark

239

-7

Mason

219

+9

Warren

248

-28

McDonough

271

-9

Commodity price projections in context. Current commodity prices are lower than recent highs received in 2010 through 2013 and are hovering near or below break-even production prices. According to WASDE, the grain price projections for the 2016 and 2017 marketing years ($3.25 for corn and $9.05 for soybeans) are among the lowest for any marketing year since 2009 (Table).

Table. Average and projected average per-bushel corn and soybean prices for the 2009 through 2016 marketing years (source: WASDE, Schnitkey, G., farmdoc daily (6):145.)

Marketing-Year Average Per-Bushel Price Received or Projected (P)

Crop

2009

2010

2011

2012

2013

2014

2015

2016P

2017P

Corn

$3.62

$5.07

$6.24

$6.93

$4.52

$3.76

$3.77

$3.25

$3.25

Soybeans

$10.03

$11.47

$12.75

$14.66

$13.35

$10.67

$9.08

$9.05

$9.05

Farming in the red? In a document entitled "2017 Illinois Crop Budgets", University of Illinois Agricultural Economists estimate all of the direct, indirect and overhead costs associated with producing an acre of corn or soybean. What is left -after these costs are subtracted from the revenues received from grain marketing- will pay both cash rental rates and farmer living expenses. Even for highly productive farmland in Central Illinois, those that produce corn and owe more than $188 per acre for land rental are projected to have negative income in 2017. While the outlook is a little brighter for soybeans after corn ($235) or soybeans after 2 years of corn ($253), producing continuous corn on highly productive farmland in central Illinois is not ($138) (source: Schnitkey, G., farmdoc daily (6):145). Even less will be left to cover both living and cash rent expenses after farm budget figures are updated to reflect the lower October WASDE price estimates.

One can compare the 2017 crop budget figures with those of the county average cash land rental rates in 2016 and see that even for the most productive cropping systems, many farming under these rental terms would be doing so at a loss. While land area is finite and the competition for rental farmland is fierce, commodity price projections and the continued high costs of production suggest that in many cases either farmers will have to reconsider farming parcels with rental rates above their production costs or rental rates will need to drop further.

Additional resources.

References.

USDA-National Agricultural Statistics Service. 2016. Average County Cash Rental Rates. Accessed through the QuickStats Web-tool. Oct. 12, 2016.

Schnitkey, G. "Corn and Soybean Revenue Projections for 2016 and 2017." farmdoc daily (6):145. Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign. August 2, 2016.

Schnitkey, G. 2016. "2017 Illinois Crop Budgets". Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign. Available in the management section of the farmdoc website: www.farmdoc.illinois.edu.

WASDE-558. World Agricultural Supply and Demand Estimate. Oct. 12, 2016. USDA.



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