By Angie Peltier
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 University of Illinois Agricultural Economists, grain price projections for the 2016 and 2017 marketing years ($3.50 for corn and $9-9.50 for soybeans) are among the lowest for any marketing year since 2009 (Schnitkey, G., farmdoc daily (6):145, Table).
Table. Average and projected average per-bushel corn and soybean prices for the 2009 through 2016 marketing years (source: 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 | $3.50 | $3.50 |
Soybeans | $10.03 | $11.47 | $12.75 | $14.66 | $13.35 | $10.67 | $9.08 | $9.50 | $9.00 |
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).
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.
Source:illinois.edu