Cash rental rates for farmland are a popular topic in farm country. As farm incomes climbed earlier this decade, cash rents predictably followed suit. Now that farm incomes have dropped going into a sixth-straight year, cash rental rates have declined.
However, the decline isn’t as steep as many in the industry thought it would be because of lower incomes. For the 2019 crop season, the Farmers National Company saw cash rental rates make a minor move lower, but overall the rates stayed mostly steady compared to the previous year.
Farmer interest in renting land remained strong enough in most areas to continue to support those steady cash rent prices. In the Northern Plains states and other areas with lower yields, it was more challenging to establish cash rents. In spite of the continuing pressure on farm incomes and working capital, Farmers National says it had an “excellent experience” in collecting rental payments on their clients’ managed farms.
Land rental rates are usually a bit slower to go up as land values and farm incomes rise. Rents tend to be slower to decline as farm incomes drop as they have in recent years.