2023 Cash Rent Outlook: Be Ready for Higher Rates

Be ready to see rent hikes. For 2022, the national average for cash rents on cropland is $148 per acre. That’s up $7 from last year and eclipsed the previous high of 2015’s $144 per acre, according to USDA National Agricultural Statistics Service.

Gary Schnitkey, Krista Swanson, Nick Paulson, and Jim Baltz of the University of Illinois crunched USDA county-level data for Illinois. Overall, cash rents rose between 2021 and 2022. 

For 2022, the average cash rent for Illinois in 2022 at $243 per acre, up by $16 per acre from the 2021 level of $227 per acre, according to National Agricultural Statistics Service (NASS). The 2022 rent is a record for Illinois, surpassing the previous high of $234 set in in 2013.

 As is typical, Schnitkey says, cash rents are the highest in the central part of the state while cash rents are lower in southern Illinois. The highest cash rent of $331 per acre occurred in Piatt and Moultrie Counties, counties adjacent to each other in central Illinois.  The lowest cash rent of $53 per acre occurred in Johnson County, a county in southern Illinois.

Outlook for 2023 Cash Rents

Annually, the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) conducts a mid-year survey to ask its members about cash rent expectations in the upcoming year. 

The ISPFMRA reports cash rents by four land classes: excellent, good, average and fair (based on soil productivity and average corn yields). 

 
ISPFMRA rents increased between 2021 and 2022.  For the excellent land class, cash rent went from $309 per acre in 2021 to $369 in 2022, an increase of $60 per acre. 

Professional managers of farmland are indicating that cash rents will rise in 2023. Increases by land class are:

• $17 per acre for excellent land class ($386 projected for 2023 – $369 for 2022),
• $14 per acre for good land class ($336 projected for 2023 – $322 for 2022),
• $9 per acre for average land class ($384 projected for 2023 – $275 for 2022),
• $17 per acre for fair land class ($248 projected for 2023 – $240 for 2022),

Overall, we're seeing increases across all land classes, Schnitkey says, but they're less than the increases that happen between 2021 and 2022. 

“Increasing rents occur because average returns to farmland have exceeded average cash rents in recent years, leading to relatively high farmer returns,” he says. “The complication for farmers with basing future cash rents on high returns in past years do not necessarily translate to high returns in future years.”

 
For 2023, Schnitkey says, farmers should still have a relatively profitable year, based on $5.50 per bushel corn and $13 per bushel soybeans. 

“If those prices happen and we get near average yields, we will likely have operator and land returns above our average cash rent levels,” he says. “However, there are risks out there because there is a potential for much lower prices.”

History shows, he says, that cash rents tend to go up quicker than they go down. 

Read More: Information for Setting 2023 Cash Rents