It took years for land-rental rates to rise during the agricultural boom, and now they are coming down much slower than commodity prices, which peaked in 2012, writes economist Gary Schnitkey of U-Illinois.
“If projections hold, 2016 will be the third year in a row in which cash rents are above operator and land returns,” says Schnitkey at farmdoc daily in comparing rental prices for farmland handled by management companies. While rates are declining, the reductions “will not be enough to cause farmer returns to become positive. Obviously, it isn’t rent alone that needs to decrease,” said Schnitkey, who has estimated farmers need to cut their production costs by $100 an acre to avoid losses.