Can Illinois Farmers Cut $50/Acre Rent In 2016?

[Jim Meade / Iowa City]

A University of Illinois study suggests farmers in that state should try to cut expenses by $100/Acre to make a small prifit in 2016, and $50 of that should come from rent.  Will landlords agree to take $50/Acre less money next year?  Will farmers pay up if the landlord holds firm?

http://farmdocdaily.illinois.edu/2015/08/magnitude-of-needed-decreases-2016-cash-rents.html

[BA Deere]

Well that depends, if corn rallies 50¢ or a buck before Sept 1 lease termination date, farmers may feel content to let stand pat and landlords may not feel as generous with $4.50 cash corn.

Each situation is different, a decent landlord that hasn`t cut the rent in the last 2 years might feel that it`s time to give the renter a break. And some have new blood wanting to rent at higher money.  Late in the spring around here after the grain price drop, some land was rented for $345/acre, the new tenant never had an opportunity to have locked in above COP until possibly that latest rally a couple weeks ago.  But cases like that the high priced rent is amortized with the rents on land that never did get raised justly over the past few years.

[sw363535]

$2.50 corn will make it easy to negotiate.

[BA Deere]

Yes SW, after today the USDA just lower how much rent can be paid   😞

[sw363535]

Unfortunately rent is probably the most flexable cost in farming at this time....

Owners may not want to admit that but there is a level of "deteriation" that comes with inflexability. Costs of production will drop with grain prices for survival if nothing else.  So if rent is inflexible, fertilizer, seed costs, labor, timely management, etc will become flexible. There is no choice,  less income means less money to spend...

Rent is in fact a "profit sharing" program