Written by By Andrew Eames Marketing & Communications Manager for ASFMRA
In recent years, cash rent leases have become increasingly popular among farm landowners in Illinois. Since 1995, acres operated under cash rent leases have increased 44%, 105%, and 117% in northern, southern and central Illinois, respectively, for farms enrolled in the Illinois Farm Business Farm Management (FBFM) Association.
A recent study examines the impact of multiple factors on farmland leasing choices. It used data collected from the USDA National Agricultural Statistics Service, Illinois FBFM Association, University of Illinois farmdoc and Environmental Working Group.
Climbing Acres Under Cash Rent
Results indicate commodity prices, soybean revenue, government crop insurance expenditures and commodity payments have influenced the increasing use of cash rent leases. The study explores the varying levels of impact made by each of these factors to present a clearer picture behind what’s driving the increased usage of cash rent as a leasing option.
With the majority of farmland in the state falling under some type of rental agreement, understanding what is driving the change toward more cash rent leases can help farm operators as well as farm landowners and the professional farm managers representing them in the process of negotiating rental contracts.
Fluctuations in crop prices, yields, revenues and government outlays for commodity payments and crop insurance may have major ramifications on the leasing market in the years to come.
The authors of this leasing-focused study, titled “Factors Influencing Increased Usage of Cash Rent Leases in Illinois,” are Jacob Styan, Maria A. Boerngen and Michael J. Barrowclough. The full submission can be found in the 2021 Journal of the ASFMRA. This edition of the journal also features 10 additional articles that cover a wide selection of topics. Those topics include “Machinery Replacement Strategies,” “Irrigated Acreage Change and Groundwater Status in Eastern Arkansas” and “Cost Cutting Strategies for Midwestern Row Crop Producers.”
