2006 Cash Rental Rates in Missouri
Ron Plain and Joyce WhiteDepartment of Agricultural Economics
In the spring of 2006, 223 Missourians responded to a mailed survey and provided details of their cash rental arrangements for various types of farm property. A summary of their rates for Missouri cropland, pasture, farm buildings, and pasturing livestock is shown in the following tables and charts. As expected, most rates had increased since our last survey in 2003.
This guide should not be used as the sole basis for determining your rent, but it may provide a reference as you consider the factors unique to your situation. The acres of land available for rent (supply) and the number of tenants wanting to rent for cash (demand) can affect the amount of rent negotiated.
Table 1. Annual cash rent paid for missouri crop and pasture land in 2006
| Type of land | Average rent per acre | ------------ Range in rents ------------ | Average yield per acre | Number reporting | |||
| Low | Mid | High | |||||
| Cropland | |||||||
| Corn | Dryland | $79.42 | $30 | 75 | 121 | 137 bu. | 152 |
| Irrigated | $97.04 | $75 | -- | 100 | 181 bu. | 3 | |
| Soybeans | Dryland | $77.57 | $25 | 72.25 | 121 | 44 bu. | 154 |
| Wheat | Dryland | $70.34 | $20 | 60 | 121 | 61 bu. | 36 |
| Double-crop wheat-soybeans | $72.47 | $40 | 60.50 | 121 | wheat 62 bu. | 18 | |
| beans 27 bu. | |||||||
| Grain sorghum | $53.41 | $40 | -- | 70 | 130 bu. | 3 | |
| Alfalfa hay | $63.06 | $21 | 50 | 120 | 5.4 T | 9 | |
| Grass hay | $23.15 | $10 | 25 | 40 | 3.2 T | 35 | |
| Pasture and grazing land | |||||||
| Good pasture (less than 4 acres per 1,000 lb cow per year) | $26.00 | $10 | 25 | 50 | 134 | ||
| Fair/poor pasture (more than 4 acres per 1,000 lb cow per year) | $21.48 | $5 | 20 | 30 | 51 | ||
| Timber pasture | $12.14 | $7.50 | 12.65 | 30 | 16 | ||
| Notes: Average rents and yields are "weighted" by the number of acres rented. The mid rent in the range is the rent that has an equal number of responses below and above it. If the number reporting (last column) is small, the average may not be representative of the state. However, the figures do provide anecdotal evidence of a few rates charged. | |||||||
Table 2. Annual cash rent paid per acre by crop grown, with average yield and acreage rented (Missouri, 2006).
| Average yield (bushels per acre) | Average rent | Average size (acres) | Number Reporting |
| Corn | |||
| 100 or less | $47 | 93 | 11 |
| 101 - 120 | $70 | 181 | 42 |
| 121 - 130 | $78 | 144 | 27 |
| 131 - 140 | $82 | 278 | 29 |
| 141 - 150 | $85 | 314 | 26 |
| 151 or more | $93 | 222 | 14 |
| Soybeans | |||
| 25-34 | $50 | 209 | 8 |
| 35-39 | $65 | 218 | 25 |
| 40-44 | $74 | 207 | 56 |
| 45-49 | $82 | 256 | 32 |
| 50-54 | $89 | 268 | 17 |
| 55-60 | $92 | 449 | 8 |
| Wheat | |||
| 35-45 | $44 | 84 | 8 |
| 46-55 | $61 | 115 | 8 |
| 56-65 | $69 | 123 | 12 |
| 66 or more | $88 | 283 | 6 |
| Average yield (tons per acre) | Average rent | Average size (acres) | Number Reporting |
| Grass Hay | |||
| 2 or less | $19 | 117 | 9 |
| 2.5 - 3.5 | $24 | 78 | 16 |
| 4 or more | $26 | 141 | 9 |
| Notes: Average rents are "weighted" by the number of acres rented. Size is a "simple" average of the acreage of individual parcels rented. | |||
Table 3. Charge for pasturing cattle by stocking rate (Missouri, 2006).
| Type of rate | Average charge | Range in --- Charges --- | Average stocking rate* | Average time on pasture | Number reporting | |
| Low | High | |||||
| Per cow-calf per month | $7.52 | $5.50 | $10.00 | 0.40 | 6.8 months | 14 |
| Per yearling per month | $4.63 | $3.50 | $5.88 | 0.73 | 4.0 months | 3 |
| Per heifer per month | $7.13 | $5.00 | $9.00 | 0.92 | 7.3 months | 4 |
| * Number of animals per acre. | ||||||
Table 4. Rental rates for Missouri farm buildings in 2006.
| Type of structure | Basis of charge | Average charge | Range in charges | Number reporting | |
| Low | High | ||||
| Grain bin | per bushel per month | $.021 | $.015 | $.04 | 10 |
| per bushel per year | $.10 | $.04 | $.15 | 13 | |
| flat rate per year | $.091 X max. capacity of bin | $.04 | $.154 | 22 | |
| Machine storage, enclosed | per square foot per year | $.21 | $.09 | $.50 | 8 |
Survey responses
Persons responding to the survey provided a
description of some characteristics of their leases.
- Most indicated they had been renting farmland for several years — 11 years on average — with individual leases ranging from 1 to 55 years.
- 51 percent indicated they had both cash basis and crop-share leases with cash renters averaging 3.6 crop-share leases per person.
- Of those cash renting cropland, 86 percent said they expected to participate in government price support programs.
- Regarding division of fertility expenses between tenants and landlords, in 58 percent of cash leases the tenant paid for lime, in 38 percent the landlord paid for lime, and in 4 percent the tenant and landlord shared the cost of lime. In 7 percent of the leases the landlord paid for phosphorus and potassium while in 93 percent of the leases the tenant paid.
It was not possible from this survey to determine how these factors influenced the amount of rent shown in the preceding tables. However, thought should be given to these factors when comparing the average rates with an individual situation.
What is "cash renting"?
In a cash rental agreement, a tenant pays a landowner
a fixed amount of money per acre (or other
unit of measure) for the use of resources — land and
improvements. No nonmonetary payment or share
of production is involved. The rates are commonly
expressed as annual rates per acre per year for cropland
and pasture. However, pasture may also be cash
rented by charging a fixed rate per animal placed on
the pasture for a specific period of time.
Entire farm units may be rented on an annual basis for a flat rate. These rates vary widely because of the diversity of farm units in the amount and quality of the land as well as type and usefulness of buildings. Structures such as grain bins and storage facilities are also rented for cash. Rates are usually based on size or capacity of the structure for a specific use and time period — such as grain bins per bushel per month or per year for storing corn or soybeans.
A written lease that describes the terms of the agreement is recommended. A cash lease usually includes restrictions on use, such as which crops can or cannot be grown on specific fields and the degree of productivity that must be maintained. It also states the amount of rent due, the time and method of payment and the duration of the lease. Apart from these terms, the tenant has free rein in planning production or use of facilities.
Pluses and minuses of cash renting
The tenant:
-
+ Is relatively free to make management decisions
and develop a business unit.
+ Receives all profit resulting from higher crop yields or higher commodity prices. This adds an incentive for higher production.
- Has increased risk. Rent is fixed regardless of production.
- Can have large capital requirements for production expenses.
- Can have rent increased for doing a good job. As yields increase, landowner sees opportunity to negotiate a higher rent.
-
+ Is assured of a specific level of income.
+ Is not required to tie up cash in the production process.
+ Has no worries about storing or marketing crops.
- In good years, does not receive as much money as he/she would in a crop-share arrangement.
- Worries that the tenant will let the place run down.
- Has little chance to do income tax management.
High rents increase the tenant’s risks but benefit the landowner. A variable or flexible cash rent based on yields and prices can help distribute risk. See the agriculture business management specialist at your local University Extension center for information on other types of rental arrangements and for lease forms.
This report is also available as a PDF document: http://agebb.missouri.edu/mgt/cashrent.pdf