Tuesday, October 29, 2013
100-dollar-bill-08042011-feature

Illinois: Farms with High Cash Rent Percentages and Levels

AgFax.Com - Your Online Ag News Source


Commodity prices likely will be lower in the next several years than in the past several years, leading to lower crop farm returns. Lower returns may require some cash rents to decline, particularly on farms having larger percentages of acres with high cash rent levels. In this post, proportions or farms that most likely will have to adjust cash rents are presented. These farms are judged as having over 90% of their acres cash rented and having average cash rents that exceed county cash rents by more than $25 per acre. About 4% of grain farms meet the proceeding criteria. A higher proportion of larger farms meet these criteria.

Criteria for Classifying Farms

Herein, grain farms enrolled in Illinois Farm Business Farm Management are classified by:

    1. Percent acres cash rented. A value of 90% means that 90% of tillable acres are cash rented. The remaining 10% of acres either are owned or share rented.
    2. Farm-minus-county cash rent. The average cash rent on a farm is subtracted from the county average rent for the county in which the farm is located. For example, take a farm whose cash rent averages $300 per acre and comes from a county with an average cash rent of $275 per acre. Farm-minus-county cash rent for this farm is $25 per acre, indicating that its average farm rent is $25 higher than the county average.
 

Data from 2012 are used to classify farms that receive the majority of their gross revenue from grain operations. These grain farms tend to rent more of their farmland than all farms in Illinois.

Particular attention is given to farms meeting two criteria:

  1. cash rent more than 90% of their acres, and
  2. have $25 per acre or greater farm-minus-county cash rents.

Results from farm financial simulations suggest that these farms will face more difficulty in generating positive farm incomes than farms with lower cash rent percentages and levels. Not all farms that meet these two criteria will face difficulties. Cost levels, off-farm income sources, and debt-to-asset position also impact the ability to absorb lower returns.

Farms Meeting Criteria

On average, 51% of acres on grain farms are cash rented (see Table 1). The amount of farmland controlled by cash rent is higher for the two largest farm sizes: 64% of acres are cash rented on farm with between 4001 and 5000 acres and 77% of acres are cash rented on farms with over 5000 acres.

FEFO_13_20_tab1.jpg

Click Image to Enlarge

For all grain farms, only 12% of the farms cash rent 90% or more of their farmland. These percentages are the lowest for 2001 to 3000 acre farms, at 9% of the farms (see Table 1). Percentages increase for larger farm size: 12% for 3001 to 4000 acre farms, 25% for 4001 to 5000 acres, and 28% of farms with over 5000 acres.

For all grain farms, the average farm-minus-county cash rent is $2 per acre (see Table 1). Average farm-minus-county cash rents generally increase from smaller to larger farm sizes. Farms with less than 500 acres average -$33 of farm-minus-county cash rent average. Farms with over 5000 acre have an average farm-minus-county cash rent of $52 per acre.

There are only 4% of the farms meeting both criteria: a) cash rent more than 90% of their acres and b) have average farm-minus-county-cash-rent over $25 per acre. A higher proportion of these farms are in larger farm sizes. Twenty-five percent of farms between 4001 and 5000 acres meet both criteria and 28% of farms with over 5000 acre meet these criteria.

Summary

Commodity prices likely will be lower in the next several years than they have been in the past several years. As a result, per acre returns will decline, decreasing the ability to pay high cash rents from returns. This situation may require some farms to adjust. Those farms with over 90% of their acres cash rented and having farm-minus-county cash rents over $25 per acre may face the most financial pressures. However, these farms also may do well if they have lower than average costs. In any case, about 4% of farms cash rent more than 90% of their acres and have $25 per acre or more farm-minus-county cash rents. A higher proportion of larger farms meet these criteria.

Listen to MP3 podcast

Gary Schnitkey

farmdocDaily

Tags: , , , ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    Tax Extenders Delays Bad for Economy, Says Senator – DTN11-25

    DTN Grain Close: Bean Complex Rallies, Grains Follow11-25

    USDA: Weekly National Peanut Prices11-25

    Georgia: 10 Farm Bill Meetings Scheduled for Mid Dec.11-25

    AgFax Rice Review: Iraq Resumes U.S. Purchases; Cambodia Wins Best Rice Award11-25

    DTN Livestock Midday: Cattle Futures Hold Sharp Losses11-25

    Winter Weather Creates More Problems for Railroads — DTN11-25

    Future of Cellulosic Biofuels in U.S. Questioned — DTN11-25

    DTN Grain Midday: Soybeans Lead Trade Higher11-25

    AgFax Peanut Review: Growers Urged to Plant Earlier; Texoma Sells Drying Facility11-25

    DTN Cotton Open: Futures Edge Slightly Higher11-25

    DTN Livestock Open: Cattle Paper to Bounce Higher11-25

    Shurley on Cotton: New Round of Weakness Sets In11-25

    DTN Grain Open: Markets Start Out Mixed11-25

    Keith Good: Farmers Care About a Labor Force, Not Politics — AFBF11-25

    Grain TV: Strong Demand Unable to Boost Soybeans11-24

    DTN Livestock Close: Cattle Futures Hit Reverse, End Lower11-24

    Welch on Wheat: Crop Condition Down Slightly11-24

    AFB Grain-Soybean Close: Corn Under Pressure Again11-24

    AFB Cotton Close: Trading at 5-Year Lows11-24

    AFB Rice Close: Futures Turn Lower11-24

    Welch on Grain: Snow Keeps 770M Bushels of Corn in Field11-24

    Doane Cotton Close: Another Down Day11-24

    DTN Cotton Close: Finishes Just Above Contract Low11-24

    Farmland Partners Buys 7 South Carolina Farms for $28M11-24

    Livestock: Hog and Pork Prices Return to Reality11-24

    Corn: Breaking Down Stalks Takes Thought, Planning — DTN11-24

    DTN Fertilizer Outlook: Winter’s Arrival May Delay Some Buying11-24

    Brazil Soybeans: Dry Conditions Still Cause for Concern11-24

    Flint on Crops: Low Input Farming May be Necessary in 201511-24

    Midwest Corn And Soybean Yields – Our Readers’ Reports – AgFax11-22

    Rice Comment: The Case for Neonicotinoid Seed Treatment11-22

    U.S. Rice: Rain Stalls Texas 2nd Crop Harvest; Crop Sales Continue11-22

    Rice Market: Sale to Iraq Moves the Market11-22

    Rose on Cotton: Looking for the Positives This Week11-21

    Grain Drying: 6 Questions About Effects Of Sudden Drop In Temps11-21

    Is Your Lifestyle Costing You the Farm?11-21

    Farmers Storing Grain Need to Weigh Risk Management Factors – DTN11-21

    Peanut Harvest Updates From Southeast, Delta And Southwest – AgFax11-21

    Cleveland on Cotton: 57 Cents – ‘The Bottom is In’11-21

    Ag Labor: Immigration Order Provides Little Long-Term Benefit – DTN11-21

    USDA: Peanut Price Highlights11-21

    Oklahoma Pecans: Deliveries Remain Light11-21

    Georgia Pecans: Buying Interest Very Active11-21

    Ag Policy: Farm Bills Need Long-Term View11-21

    Cotton Market Weekly Review by Region11-21

    Arkansas Cattle: Ranchers Should be Alert to Acorn Poisoning11-21

    Economist: Livestock Industry Will Have Strong Rebound11-21

    DTN Dried Distillers Grain: Cheaper Feed Source for Beef Producers?11-21

    Mississippi Outdoors: Common Deer Parasites Do Not Affect Venison11-21

    AgFax Wildlife Review: New E-Book Offers Tips for Gardening in South11-21

    Weather Challenges Florida and Iowa Farms — DTN11-21

    Vilsack: Immigration Order Creates ‘Stability’ in Ag Work Force — DTN11-21

    Texas Cotton Harvest – Still Some To Go – AgFax11-20

    Mississippi: Water Conservation Summit, Stoneville, Dec. 1011-20

    Farm Internet Service Still Slow or Non-Existent, But Improving – DTN11-20

    Yield: Important Factor in Your Irrevocable Farm Program Choice11-20

    U.S. Grain Transportation: Weekly Inspections Reach Record11-20

    U.S. Drought Outlook: Improvements Expected for California, Southwest11-20

    U.S. Energy: Planned Refinery Maintenance Light in 201411-20

    Propane Stocks: Post Slight Increase11-20

    Gasoline Prices: Decrease by 5 Cents11-20

    Diesel Prices: Average Drops 2 Cents11-20

    Sunbelt Ag Events

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney