All public information that will be useful in making 2022 cash rents is now available. The National Agricultural Statistics Service (NASS) recently released state and county rents for 2021. In addition, the Illinois Society of Professional Farm Managers and Rural Appraisers released their projections of 2022 rents on professionally managed farmland. Overall, cash rents rose between 2020 and 2021. Results from the Illinois Society suggest rising cash rents in 2022.
Average 2021 Cash Rents in Illinois
The National Agricultural Statistics Service (NASS) reported the average cash rent for Illinois in 2021 at $227 per acre, up by $5 per acre from the 2020 level of $222 per acre (see Figure 1). The 2021 rent is the third highest since 1970, below the all-time high of $234 per acre set in 2013 and $228 per acre rent in 2014 (see farmdoc daily, August 17, 2021).
Cash rents vary across Illinois, as illustrated in Figure 2, which shows average county cash rents for non-irrigated cropland released by NASS on August 27. The counties with the eight highest cash rents are all located in central Illinois: $311 per acre in Macon County, $297 in Moultrie, $297 in Piatt, $291 in Logan, $280 in Sangamon, $278 in Christian, $278 in Menard, and $275 in De Witt. Higher cash rents also occur in northern Illinois (Carrol at $268 per acre, DeKalb at $268 per acre) and western Illinois (McDonough at $256 per acre).
Southern Illinois has lower per acre cash rents. The counties with the five lowest cash rents are Johnson at $52 per acre, Williamson at $93, Union at $95, Massac at $111, and Franklin at $119.
Differences in soil productivity explain a large part of the variations in cash rents. Figure 3 shows a scatter graph of average 2021 county cash rents related to the average county soil productivity index (SPI). The SPI is published for Illinois soils by the Department of Natural Resources and Environmental Science at the University of Illinois (click here for more information).
Higher SPIs are correlated with higher yields. Figure 3 shows the average county SPI and average 2021 cash rents, with the two series having a strong, positive correlation coefficient of .89. Higher SPIs tend to be located in central and northern Illinois (see farmdoc daily, November 7, 2017 for a map).
The SPI of farms within a county can vary from the county average. Based on the above relationship, an “average” cash rent projection for a farm in a particular county can be calculated with the following equation (see farmdoc daily, November 7, 2017 for a discussion):
“Average” cash rent = -139 + (2.80 x SPI) + CRD adjustment
where CRD is the crop reporting district. CRD adjustment values are shown in Table 1.
To illustrate, take a farm with a 134 SPI that is located in Champaign County. Champaign County is in the East CRD that has a CRD adjustment of $27 (see Table 1). Given this information, the average cash rent is estimated at $263 per acre (-139 + 2.80 x 134 PI + $27 CRD adjustment).
Variability in Cash Rents
Actual farm-level cash rents exhibit large variations from the above averages. For example, 60% of the rents on McLean County farms enrolled in Illinois Farm Business Farm Management (FBFM) in 2019 were within a range from $214 to $287 per acre. Note that the remaining 40% of the rents were outside that $73 per acre range. Rent variations often are due to the farm’s characteristics, including soil productivity, drainage, land access, land terrain, field size, and field obstructions. The desires of landowners also play a large role in rent levels.
Professionally Managed Farmland
Annually, the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) conducts a mid-year survey to ask its members about cash rent expectations in the upcoming year. This mid-year survey is part of the Society’s land value effort, which produces a land value booklet each year, giving farmland prices and rental information by regions of the state (click here for an archive of reports). Results for the 2021 mid-year survey were reported on a September 4th webinar. An archive of the webinar, along with the slides used during the webinar are available here.
The ISPFMRA reports cash rents by four land classes: excellent, good, average, and fair. Land class divisions are made based on SPI ratings, with excellent farmland having SPIs ranging from 133 up to 147. SPI ranges for the remaining classes are shown in the first column of Table 2. Average corn yields vary by land class. For example, corn yield averaged 211 bushels per acre from 2016 to 2020 for counties that had average SPIs over 133 (see Table 2). The average corn yields were lower for other classes: 204 bushels per acre for the good land class, 181 for the average land class, and 156 for the fair land class.
In 2021, the ISPFMRA reported an average rent for excellent quality farmland that is professionally managed of $315 per acre. As with all rents, there is a considerable range around the average. This $315 per acre average was $38 per acre higher than the $277 average reported for counties by NASS. Overall, professionally managed farmland has higher cash rents than NASS averages. A variety of reasons can be given for this difference, including the desires of farm owners who seek professional management for higher returns.
ISPFMRA members are projecting higher rents in 2022. For excellent quality farmland, the 2022 cash rent is projected at $350 per acre, up by $35 from the $315 average for 2021. Average cash rent for farmland in the good land class is projected at $299 per acre for 2022, up by $29 per acre from 2021 rents. The cash rent for average land class is projected at $249 per acre, up by $23 from the 2021 average. Cash rent for fair quality farmland is projected at $188 per acre, up by $22 from the 2021 average. Expectations for cash rent increases from 2021 to 2022 exceed 10% across all land classes.
Outlook for 2022 Cash Rents
Professional managers of farmland are indicating that cash rents will rise in 2022. This outlook likely results because average returns to farmland have exceeded average cash rents in recent years (see farmdoc daily, August 17, 2021). Typically, periods of higher returns lead to higher cash rents.
We note, however, that increasing cash rents presents risks to farmers. Higher returns in recent years have occurred because of trend or higher yields, relatively high prices, and Federal payments through ad hoc programs such as the Market Facilitation Program and Coronavirus Food Assistance Program. A return to average commodity prices from 2014 to 2019, without continued ad hoc support, would lead to very low and likely negative farmer returns (see farmdoc daily, August 24, 2021).
Schnitkey, G., C. Zulauf, K. Swanson and N. Paulson. "Stress Test of 2022 Crop Returns." farmdoc daily (11):124, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 24, 2021.
Schnitkey, G., C. Zulauf, N. Paulson and K. Swanson. "Cash Rents Rise in 2021 with Implications for 2022." farmdoc daily (11):120, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 17, 2021.
Schnitkey, G. "Determining the Average Cash Rent Based on Productivity Index." farmdoc daily (7):205, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, November 7, 2017.
Disclaimer: We request all readers, electronic media and others follow our citation guidelines when re-posting articles from farmdoc daily. Guidelines are available here. The farmdoc daily website falls under University of Illinois copyright and intellectual property rights. For a detailed statement, please see the University of Illinois Copyright Information and Policies here.