2008 Cash Rental Rates in Missouri

Ron Plain and Joyce White
Department of Agricultural Economics
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In the summer of 2008, 207 Missourians responded to a mailed survey and provided information on their cash rental arrangements for farm property. A summary of their rates for Missouri cropland, pasture, farm buildings, pasturing livestock and whole farms is shown in the following tables. As expected, most rates have increased since our last survey.

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), as well as production costs and market prices, can affect the amount of rent negotiated.

Table 1. Cash rent paid for Missouri crop and pasture land in 2008.

Type of landAverage rent per acre per year ($)------------ Range in rents ------------Normal yield per acreNumber of responses
LowMidHigh
Cropland
CornDryland$97.95$20100175135 bu.160
Irrigated$147.99$125--150175 bu.4
SoybeansDryland$96.91$209517542 bu.144
WheatDryland$86.52$187514056 bu.27
Double-crop wheat-soybeans$104.69$4075150wheat 56 bu.19
beans 33 bu.
Alfalfa hay$61.82------3.25 T3
Grass hay$30.31$1325602.86 T19
Pasture and grazing land
Good pasture (less than 4 acres per 1,000 lb cow per year)$29.95$103065 98
Fair/poor pasture (more than 4 acres per 1,000 lb cow per year)$22.34$7.502540 39
Timber pasture$7.03$48.6920 8
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.

Table 2. Cash rent paid for Missouri cropland in 2008 by yield and acreage.

Average yield (bushels per acre)Average rent per acre per year ($)Average size (acres)Number of responses
Corn
100 or less$92 1536
101 - 120 $85 17241
121 - 130 $87 23231
131 - 140 $87 27221
141 - 150 $11415626
151 or more$12524722
Soybeans
25-34$59 126 5
35-39$59 26725
40-44$10118952
45-49$10720731
50-54$11922017
55-60$129275 5
Wheat
35-45 $78 1329
46-55 $82 646
56-65 $106 846
66 or more$90 2015
Average yield
(tons per acre)
Average rent per acre per year ($)Average size (acres)Number of responses
Grass Hay
2 or less$22 447
2.5 - 3.5$351157
4 or more$291482
Notes:
Average rents are weighted by the number of acres rented.
Size is a simple average of the acreage of parcels reported.

Table 3. Charge for pasturing cattle by stocking rate (Missouri, 2008).

Type of rateAverage
charge
Range in
--- Charges ---
Average
stocking
rate*
Average time
on pasture
Number
reporting
LowHigh
Per cow-calf per month$9.44$4.00$27.000.357.1 months18
Per heifer per month $5.75$3.50$10.50 0.546.8 months4
* Number of animals per acre.

Table 4. Rental rates for Missouri farm buildings in 2008.

Type of structureBasis of chargeAverage chargeRange in chargesNumber reporting
LowHigh
Grain binper bushel per month$.023$.015$.0310
per bushel per year$.133$.10$.2516
flat rate per year$.115 X max. capacity of bin$.028$.3222
Machine storage, enclosedper square foot per year$.20$.094$.41710

Whole-farm annual rent
In our 2008 survey, six farms with 80 percent or more cropland averaged rent of $104 per acre; four farms with 75 percent or more pasture averaged rent of $25 per acre; and six farms with a mix of 85 percent or more pasture and waste averaged rent of $7 per acre. Farms with residences were not included. It was not clear what impact barns, bins, etc., had on rents, but productive capability of land appeared to be a major factor in all.

    Average rates per acre per year ($)
Type of Land  
2006
2007
2008
Cropland        
Corn Dryland
79.42
86.30
97.95
Irrigated
97.04
127.72
147.99
Soybeans  
77.57
85.29
96.91
Wheat  
70.34
77.18
86.52
Double-crop wheat-soybeans  
72.47
93.31
104.69
Grain sorghum  
53.41
-
-
Alfalfa hay  
63.06
52.73
61.82
Grass hay  
23.15
26.32
30.31
Pasture  
Good  
26.00
28.37
29.95
Fair/Poor  
21.48
20.98
22.34

Timber Pasture

 
12.14
7.03
7.03

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.

Storage facilities, such as grain bins and equipment storage structures, are also rented for cash. Rates are usually based on size or capacity for a specific use and time period ó such as grain bins by capacity or a storage rate per bushel per month or per year. Use or availability of auxiliary equipment and utilities may also affect the rate.

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.

It is common practice for the tenant to pay all costs involved in raising the specified crops during the period of the lease. Landowners normally pay for improvements expected to endure beyond the period of the lease, as well as expenses related to property ownership. As indicated by our 2006 survey, sharing of expenses for durable fertility improvements is a consideration in multi-year crop and pasture leases.

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.
    +May enroll in government programs and receive entire payment.
    - 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.
The landowner:
    + 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 tenantís risks but benefit the landowner. A variable or flexible cash rent based on yields and prices can help distribute risk. However, adding variable or flexible features to a cash rental agreement can affect its classification for government programs and the distribution of payments. It is suggested at a proposed flexible agreement be reviewed by the local USDA Farm Services Agency office for classification before finalizing the agreement.

For information on other types of rental arrangements and lease forms, contact the agriculture business specialist at your local University of Missouri Extension Center.

This report is also available as a PDF document: http://agebb.missouri.edu/mgt/cashrent2008.pdf

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