Indiana Farm Cash Rent Agreement

Farmers` yields have been low since 2014: farmers in central Illinois have averaged us$17 per hectare between 2013 and 2018 (see Chart 3). From a yield perspective, $17 per hectare is a low yield for the risk of operating one hectare of cash rent. There are a number of reasons for overall stable cash rents in recent years, including the competitiveness of the agricultural market, farmers` fear of losing their competitiveness in the event of loss of rental land, the accumulation of financial reserves during the years of high yields from 2006 to 2013, and optimism about future prices. “The budgets for plant production in 2017 show big losses for producers of cash rents in 2016,” Harrison said. “The result is considerable pressure to reduce cash rents, particularly leases, which are based on firm cash payments, not flexible rates.” “There are so many things farmers are thinking about, and the legal thing is probably the last thing to do. But this could be the year that some changes will be made,” she says. Once all the thoughts and numbers are done and you decide to terminate the lease of arable land, there are steps you should take to do it properly, says Erin Herbold-Swalwell, a lawyer at Brick Gentry, PC in Mingo, Iowa. “This would indicate that cash rents would have to pay on average close to $240 per hectare to farmers to achieve a yield of almost $0 per hectare, or that cash rents would have to drop by $35 per hectare so that farmers could work at a break-even level. As a percentage, this would be 12.5%,” the economists write. The reduction of $35 per hectare could come from non-dark costs, but wherever they come from, it only brings farmers back to a balanced level. Larger incisions will be needed to become profitable again. Economists sum up the rental outlook for 2021: one problem in setting an earlier deadline could be setting a fixed rent in cash.

Owners are generally reluctant to adapt to changes in the market, Harrison said. “I guess most tenants want to know by September 1 of the current harvest year whether they will have a particular farm or land next year for good management reasons,” Harrison said.

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