Management

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.

Recent projections for the 2026 crop year suggest a fourth consecutive year of negative farmer returns to corn-soybean rotations in Illinois on cash rented farmland. The current return for owned and cash rented farmland is the same. Farmland ownership has also provided capital returns through increased farmland values. Low farmer returns from cash rent farmland relative to land prices make it difficult for farmers to use rented farmland to build capital to support a farmland purchase.