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U of I Extension offers cash rent calculation guidance

Farmers and landowners seeking guidance on cash rent negotiations have a new resource.

Kevin Brooks, University of Illinois Extension educator in farm business management and marketing, tells Brownfield…

“The number one question that we get into extension offices concerning agriculture is ‘What should cash rent be?’”  He says, “There’s a lot that goes into that equation. The first question we ask is ‘How does your farm perform?’ And oftentimes the answer back is ‘Well, I really don’t know.’”

Brooks encourages landowners to be engaged in the process…

“Anybody can write that into their cash lease to get the yields.”  He says, “I also do recommend verifying them and most farmers are pretty willing to turn those over. And you can also base that by getting a soil map, and you can go to the local NRCS office and get an idea of where your farm falls in on its productivity index.”

He says landowners that aren’t as knowledgeable can utilize a recently published formula…

“Just basically expected yield times expected price times whatever percentage that you want to negotiate.”

Brooks says many landowners settle on the USDA’s county averages for cash rent, but he doesn’t recommend that…

“The problem with USDA numbers is those are at best on average, but the number of responses they get from landowners and farmers in a given year is relatively low.”  He says, “And so it’s not really a good average across a particular county.”

Most cash rent negotiations take place in the fall, but Brooks encourages both parties to begin the discussions sooner rather than later.  

A link to more information can be found HERE.

AUDIO: Kevin Brooks – U of I Extension