2014 Could be a Tough Year for Cash Renters
Commodity prices likely will be lower in the next several years than they have been in the past several years. As a result, per acre returns will decline, decreasing the ability to pay high cash rents from returns. This situation may require some farms to adjust. Those farms with over 90% of their acres cash rented and having farm-minus-county cash rents over $25 per acre may face the most financial pressures.
However, these farms also may do well if they have lower than average costs. In any case, about 4% of farms cash rent more than 90% of their acres and have $25 per acre or more farm-minus-county cash rents. A higher proportion of larger farms meet these criteria.