The TIAA Center for Farmland Research provides white papers and briefs on Center related publications and outreach activities highlighting topics of interest to many stakeholders, from farmers to policy makers to investors. In addition to our research program and materials available here, the Center provides financial and other support to farmdoc and a range of economic tools.
White Papers
The Relationship Between Inflation and Farmland Returns (2025)
This TIAA Center for Farmland Research publication examines the relationship between inflation and farmland returns through time and across differing periods of inflationary pressure from 1970 to present. Farmland is shown to be positively related to inflation and to maintain a reasonably stable, though proportional spread to consumer-based measures of inflation. Various measures of return to farmland, and to the period and location are considered with the results demonstrating the robustness of the relationship. Alternative holding periods are also examined with the result strengthening with aggregation and length of holding period. Finally, various alternative investment classes are also compared to provide portfolio context and to demonstrate the financial performance of farmland as an asset class.
Farmers that own a significant portion of their farmland base typically are in much stronger financial positions today than those who rent a higher percentage of their farmland. Overall, farmers that bought farmland twenty years ago had to meet larger cash requirements to finance the purchase compared with cash renting but have experienced large capital gains and would now seeing significantly higher returns compared to cash rent farmland.
We began publishing a formula in 2017 for calculating the average cash rent for a piece of farmland, given that farm’s average productivity index, thereby allowing averages to be stated by productivity, a known factor that impacts the level of cash rent. We have updated this formula to reflect the average cash rents for 2025, as reported by the National Agricultural Statistics Service (NASS). An individual can use this formula to calculate the average cash rent for a farm.
Today’s farmdoc daily article provides a revision to the rent factors used in a simple variable cash lease design. The revisions result in slightly smaller rent factors to be applied to measures of corn and soybean revenue to determine variable cash rents. While the decline in crop revenues from highs in 2022 results in larger reductions in variable cash rents than those observed in average cash rents, farmer returns and return projections remain negative for 2023 to 2026.
Average cash rents declined in Illinois from 2024 to 2025. Continued low return projections suggest further reductions in cash rents will occur for 2026. However, the projected declines are not expected to result in break-even or positive returns on cash rented farmland. Additional declines in cash rents and other production costs will be needed to achieve break-even or positive returns to corn and soybean production on rented farmland in Illinois at current price levels.