Leases, Yields and Stress-It Must be Harvest Time

 

The fall of the year is not only a time of harvest, but also of lease signing. For the past four years, rents in Illinois have been relatively stable with highly productive farmland average rental rates being in the $270 - $290 range. This trend looks to continue for 2021, since there has been an improvement in crop prices in the past six weeks.

 

Here in central Illinois, we have nearly equal percentages of farmland being cash rented as share rented. This is not the case in northern and southern Illinois where cash rent is the dominant form of farmland leasing. Most professional managed farmland is cash rented using the flexible cash lease format. The University of Illinois farmdoc team is suggesting that more landowners should consider this form of cash leasing instead of the strict cash lease. The flexible cash lease allows the rental to vary to better reflect the yields and prices of that growing year.

 

The U. of I. is suggesting for highly productive farmland a simplified flexible cash lease formula of a base rent of $200 per acre (paid no matter what). The tenant pays a higher rent if the crop revenue times a rent factor exceeds the base cash rent. The rent factor is 33% for corn and 40% for soybean. Yield is from the farm and the price is the average of Wednesdays from spring to fall at their typical delivery point. An example would be a corn crop yielding 230 bushels per acre with a price of $3.60 per bushel times 33% equals $273 per acre. In this case the tenant would owe an additional $73 per acre in rent after harvest.

 

Yields this year are going to vary depending on the field’s location and when that area received or did not receive rainfall. The lack of rainfall at the end of the growing season is causing some areas of the field to mature sooner than other areas, which leads to slower harvests as farmers wait for the crops to reach acceptable levels of maturity across the length of the field.

 

Stress has been an added factor in 2020, the year of the coronavirus. With the pressures of changing market conditions, weather patterns and then the changes due to COVID-19, many of us are feeling stressed. As we have learned this year, the things that trigger stress are: N.U.T.S. That is: New unexpected experiences; Unpredictability in events in our lives; Threats to you or others around you; and Sense of control is lacking in your life. But, there is help for those suffering from anxiety or stress, Illinois Extension developed the Stress Management Resources website devoted to resources to help you destress and find help.