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FEFO Archive: Farmland leases and values

Discussion of Fixed Cash Lease (Short Form for One Year)
Donald L. Uchtmann and Gary Schnitkey
FEFO 14-22, 11/25/2014
 

Abstract

A new farmland lease form called “Fixed Cash Lease (Short Form for One Year)” is now available on farmdoc. This lease is for a fixed cash rent that is one-year in length.
 
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Cash Rents in 2014 and Expected Cash Rents in 2015
Gary Schnitkey
FEFO 14-16, 9/9/2014
 

Abstract

Expected 2015 rents point to decreasing cash rent levels on professionally managed farmland. Whether or not other cash rents follow professionally managed cash rents down is an open question.
 
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Farmland Price Outlook in 2014 and Beyond
Gary Schnitkey, Bruce Sherrick and Todd Kuethe
FEFO 14-15, 8/19/2014
 

Abstract

Decreases in cash rents are not likely to cause substantial farmland price decreases. A larger risk factor for farmland price declines are increasing interest rates.
 
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Controlling Costs with Lower Crop Revenues: Cash Rents
Gary Schnitkey
FEFO 14-05, 2/25/2014
 

Abstract

Corn and soybean prices in 2014 are projected to be much lower than prices between 2010 and 2012. As a result, current projections place operator and farmland returns below average cash rents, leading to the need to reduce cash rents.
 
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High Cash Rents and Farmer Returns
Gary Schnitkey
FEFO 13-22, 12/3/2013
 

Abstract

Farmer returns are estimated for average and “high” cash rents. Farmers with average cash rents are projected to have marginal returns in 2014. Losses around $60 per acre range are projected to occur with “high” cash rents.
 
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2013 County Cash Rents: Levels, Variability, and 2014 Cash Rent Decisions
Gary Schnitkey
FEFO 13-17, 9/10/2013
 

Abstract

Average cash rents by county were released on September 6th by the National Agricultural Statistical Service (NASS), an agency of the U.S. Department of Agriculture. These county cash rents are used to develop a relationship between average rents and expected corn yields.
 
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Share-Rent Landowner Returns Compared to Cash Rents
Gary Schnitkey
FEFO 13-14, 8/13/2013
 

Abstract

Share-rent landowner returns are compared to cash rents in central Illinois. Between 2006 and 2012, share-rent returns were above average cash rents and roughly similar to the average cash rents on professionally managed farmland.
 
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Illinois Farm Real Estate Increases 16.4% for 2013
Bradley L. Zwilling
FEFO 13-13, 8/8/2013
 

Abstract

Each year the National Agricultural Statistics Service (NASS) of the USDA releases estimated average farm real estate values by state. The methodology and timing of the study has changed over time but the statistical information provides some insight as to the changes in farm real estate values from year to year.
 
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2013 Cash Rents on Professionally Managed Farmland in Illinois
Gary Schnitkey
FEFO 13-06, 4/9/2013
 

Abstract

Rents on professional managed farmland will be higher in 2013 than in 2012, continuing a string of years of cash rent increases. The increase in 2013 is less than that which occurred between 2011 and 2012.
 
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Landowner and Farmer Returns under Share Rental Arrangements with Differing Prices
Gary Schnitkey
FEFO 12-22, 10/23/2012
 

Abstract

Landowner and farmer share of returns are shown under share rent and a 40% of crop revenue leases, two arrangements that exists in practice. Resulting returns will show the variability in returns likely to be experienced, and also illustrate the downward pressure cash rents may face when prices decline to likely long-run levels.
 
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Cash Rents Given Differing Price Levels
Gary Schnitkey
FEFO 12-21, 10/16/2012
 

Abstract

The ability to pay cash rent is examined under three corn and soybean price scenarios: 1) 2013 price estimates, 2) long-run price estimates, and 3) low price estimates. The 2013 price projections yield returns that can sustain high cash rents. Lower prices likely will lead to downward pressure on cash rents.
 
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Cash Rents in 2012 and 2013
Gary Schnitkey
FEFO 12-20, 9/11/2012
 

Abstract

According to the National Agricultural Statistical Service (NASS), Illinois cash rents in 2012 increased by 16% over 2011 levels. Cash rents increases between 2012 and 2013 likely will not be as large.
 
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Illinois Farm Real Estate Continues Double Digit Increase
Bradley L. Zwilling
FEFO 12-18, 8/7/2012
 

Abstract

Each year the National Agricultural Statistics Service of the USDA releases estimated average farm real estate values by state. The estimates are based on surveys of farmers from selected geographical areas.
 
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Farmland Price Outlook: Are Farmland Prices Too High Relative to Returns and Interest Rates
Gary Schnitkey
FEFO 10-17, 10/18/2010
 

Abstract

Farmland prices are likely to increase over the next year due to higher commodity prices. The possibility of interest rate increases poses a risk for declining farmland prices.
 
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Illinois Farm Real Estate Values Continue on Upward Trend
Bradley L. Zwilling
FEFO 10-13, 8/13/2010
 

Abstract

Each year the National Agricultural Statistics Service of the USDA releases estimated average farm real estate values and cash rents by state.
 
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County Cash Rents in 2009
Gary Schnitkey
FEFO 10-07, 4/12/2010
 

Abstract

The National Agricultural Statistical Service (NASS) recently released their estimates of average cash rents per county for 2009. Forty-one percent of the counties had cash rent increases while 37% had decreases.
 
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A Historic Look at Illinois Farm Real Estate Values
Bradley Zwilling
FEFO 09-15, 10/9/2009
 

Abstract

The U.S.D.A. estimates that land values have declined slightly in Illinois.
 
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Landlord Returns From Illinois Farmland
Dale Lattz
FEFO 08-19, 11/14/2008
 

Abstract

Landlord’s net returns from farmland (based on typical crop share leases) reached a low point in 2001 and 2002. Net returns increased significantly the last two years.
 
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2009 Rental Decisions Given Volatile Commodity Prices and Higher Input Costs
Gary Schnitkey and Dale Lattz
FEFO 08-17, 10/15/2008
 

Abstract

Turmoil within the financial sector has caused concerns about the performance of economies around the world.
 
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Fourth Year in a Row of Double Digit Increases for Illinois Farm Real Estate Values
Dale Lattz
FEFO 08-14, 8/5/2008
 

Abstract

According to the U.S. Department of Agriculture, the average value of Illinois farm real estate was $5,000 per acre in 2008, 15.5 percent higher than the 2007 average of $4,330 per acre.
 
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Are Farmland Prices in Line with Farmland Returns?
Gary Schnitkey
FEFO 07-15, 10/10/2007
 

Abstract

In recent year, farmland prices have increased faster than its capitalized values. This may signal that non-agricultural factors are having more of an impact on farmland prices. Or farmland price increases may need to slow.
 
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Illinois Farm Real Estate Values Continue Double Digit Increases
Dale Lattz
FEFO 07-14, 8/15/2007
 

Abstract

USDA estimated that farmland prices increased by 13.9% between 2006 and 2007, the third year in a row of double digit increases in farmland prices.
 
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Flexible Cash Leases Based on Crop Insurance Parameters
Gary Schnitkey, Dale Lattz
FEFO 07-13, 8/8/2007
 

Abstract

A flexible cash lease is proposed that bases its payments on parameters used in setting revenue guarantees on Group Risk Income Plan (GRIP) crop insurance policies. As structured, this flexible lease causes landlords and farmers to share in commodity price changes that occur between years.
 
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Consider Higher Costs and Additional Risk When Negotiating 2008 Cash Rents
Gary Schnitkey
FEFO 07-12, 7/13/2007
 

Abstract

Caution should be exercised in increasing cash rents for 2008. If cash rents increase so that a farmer receives the same margin in 2008 as in 2001 through 2005, farmers will be in much riskier positions. In central Illinois, farmer margins need to more than double for farmers to be in the same risk position in 2008 as compared to 2001-2005.
 
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Geographical Distribution of Corn and Soybean Planting Intentions
Gary Schnitkey
FEFO 07-07, 4/6/2007
 

Abstract

While corn acreage will increase in the Corn Belt, a higher percentage of corn acres are projected to be grown outside the Corn Belt in 2007. This shift in production could cause a small drag on national corn yields; however, weather and other factors likely will be more important in determining 2007 yields.
 
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Are Increasing Cash Rents Justified?
Gary Schnitkey, Dale Lattz
FEFO 06-21, 12/05/2006
 

Abstract

Because there is uncertainty about whether high commodity prices will actually occur, caution seems warranted in increasing cash rents. Even if long-run increases in commodity prices occur, farmers do not necessarily obtain long-run higher returns or risk reductions.
 
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Increase in Illinois Land Real Estate Values Accelerates
Dale Lattz
FEFO 06-13, 08/10/2006
 

Abstract

The USDA estimates that Illinois farmland values increased by 14.1% in 2006 to an average of $3,330 per acre. Since 2000, Illinois farm real estate values have increased 68 percent.
 
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Increase In Illinois Farm Real Estate Values Continue
Dale Lattz
FEFO 05-15, 08/15/2005
 

Abstract

Each year the National Agricultural Statistics Service of the USDA releases estimated average farm real estate values and cash rents by state. The estimates are based on surveys of farmers from selected geographical areas. The surveys follow strict statistical guidelines. Estimated values maybe revised the following year based on additional information. Revisions may also be made based on data from the 5-year Census of Agriculture. Values released in 2005 did not include any revisions for previous years. The methodology and timing of the study has changed over time but the statistical information provides some insight as to the changes in farm real estate values from year to year.
 
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Soybean Rust Considerations in Share-rent Arrangements and in Crop Insurance
Gary Schnitkey
FEFO 05-06, 03/28/2005
 

Abstract

Some individuals have questioned how fungicide costs should be shared under crop-share arrangements. In addition, significant discussion has ensued concerning crop insurance coverage for rust-induced losses. These issues are covered in the following sections.
 
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An Updated Look At Illinois Farm Real Estate Values
Dale Lattz
FEFO 04-13, 08/18/2004
 

Abstract

Each year the National Agricultural Statistics Service of the USDA releases estimated average farm real estate values and cash rents by state. The estimates are based on surveys of farmers from selected geographical areas. The surveys follow strict statistical guidelines. Estimated values maybe revised the following year based on additional information. Revisions may also be made based on data from the 5-year Census of Agriculture. Values released in 2004 included downward revisions for the 1999 through 2003 time period based on the 2002 Census of Agriculture data. The methodology and timing of the study has changed over time but the statistical information provides some insight as to the changes in farm real estate values from year to year.
 
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Projected 2005 Commodity Prices Suggest Caution In Farm Rental Bidding
Gary Schnitkey
FEFO 04-12, 08/15/2004
 

Abstract

Many observers believe that cash rents for the 2005 cropping year will rise above 2004 levels because average cash rents have been increasing in northern and central Illinois for the past several years. Moreover, higher commodity prices during late 2003 and the first half of 2004 led to projections of higher agricultural profitability and were anticipated to further increase cash rent bids.
 
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Farmland Prices, Net Rents And Interest Rates Since 1970
Gary Schnitkey
FEFO 04-10, 06/11/2004
 

Abstract

Farmland prices in central Illinois have increased about 6% per year since the late 1980s. In this article, we examine whether increases in net returns or decreases in interest rates since the late 1980s provide the economic basis for increasing farmland prices. This analysis may shed light on the future direction of farmland prices.
 
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A Historic Look at Illinois Farm Real Estate Values
Dale Lattz
FEFO 03-15, 08/27/2003
 

Abstract

Each year the National Agricultural Statistics Service of the USDA releases estimated average farm real estate values and cash rents by state. The estimates are based on surveys of farmers from selected geographical areas. The surveys follow strict statistical guidelines. Estimated values maybe revised the following year based on additional information. Revisions may also be made based on data from the 5-year Census of Agriculture. The methodology and timing of the study has changed over time but the statistical information provides some insight as to the changes in farm real estate values from year to year.
 
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Cash Rent Worksheet
Dale Lattz, Gary Schnitkey
FEFO 03-01, 01/27/2003
 

Abstract

A new cash rent worksheet designed to help farmers determine the amount of cash rent that can be paid for an acre of land is available on farmdoc (Click here to download sheet). A user must have Microsoft Excel version 97 or higher to operate the worksheet.
 
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Cash Rents and Equivalent Cash Rents in Illinois
Dale Lattz, Gary Schnitkey
FEFO 02-23, 12/23/2002
 

Abstract

Most Illinois farmers rent the majority of their farmland. Alternative sources suggest that in Illinois somewhere between 60 to 80 percent of the land that is farmed is rented. This Illinois Farm Economics: Facts and Opinions reviews payments that farmers make to landlords for rented farmland. This information can aid farmers and landowners as they review their leasing arrangements.
 
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Farmland Leasing Update
Gary Schnitkey
FEFO 02-21, 11/20/2002
 

Abstract

The University of Illinois - Extension conducted a leasing survey in 2002 in which farmers and landowners were asked to describe their share rent and cash rent leases. This Farm Economics: Facts and Opinions summarizes findings from this survey and is divided into three sections: 1. Land tenure in Illinois, 2. Cash rents in Illinois, and 3. Share rent characteristics in Illinois.
 
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Landlord Returns from Illinois Farmland
Dale Lattz
FEFO 01-24, 12/06/2001
 

Abstract

Farmland returns are conceptually similar to stock returns. For a stock there may be a cash return, or dividend, and there may be appreciation in the stock's value. Similarly, farmland has a cash return to the landowner in the form of a net return from leasing the land. Farmland also may increase in value. However, like a stock investment, farmland values also can decline. This paper examines historic cash returns, or net returns, to landlords leasing Illinois farmland using typical crop share leases.
 
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Perspectives on Farmland Leasing
Dale Lattz
FEFO 01-20, 10/09/2001
 

Abstract

Alternative sources suggest that Illinois farmers own somewhere between 20 to 40 percent of the land they farm. Therefore, Illinois farmers rent the majority of land they farm. They rent this farmland from retired farmers, non-farm investors, and institutional and government agencies. This paper reviews the agreements governing the relationships between farmers as tenants on farmland and landowners as lessors of farmland. This information is useful as farmers and landowners review the leasing arrangements for the coming year.
 
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2001 Farmland Assessed Values Decrease for All Soil Types
Dwight Raab
FEFO 01-03, 02/07/2001
 

Abstract

For 2001, the certified farmland assessed values for soils of all productivity index values decreased 10% from the 2000 certified assessed values. This is largely the result of the interaction of the 1986 law limiting changes in certified farmland assessed valuation to no more than a 10% increase or a 10% decrease. The underlying economic conditions in Illinois agriculture are the driver of the limit down movement. Increasing production costs, relatively lower commodity prices, and a slightly increased interest rate all had a role in the decreasing certified assessed farmland values. The state of the agricultural economy in Illinois drives the use-value farmland assessment calculations. An noted above, commodity prices, general farm expenses, and interest rates all have an impact in the calculation of the assessed valuation of farmland in its use as farmland. The decrease in certified values for all soil productivity indexes was restricted by the 1986 ten percent limit law since the decrease in calculated assessment valuation from 2000 to 2001 exceeded ten percent. Each soil type identified in Illinois is assign a soil productivity index based on the production capacity of the soil. These certified assessed valuations were issued to county assessing officials in May of 2000 for use in 2001 farmland assessments. Property tax on the 2001 farmland assessments are paid in 2002.
 
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