Tuesday, January 8, 2008

Figuring out Cropland Cash Rental Rates

This time of year I get the most phone calls about land rental rates. I get them both from growers and landowners. With the news of higher commodity prices, landowners may want to capitalize on there investment. Growers may be thinking that the higher commodity prices might be offset by increased production costs and a reduction in government support payments.

There are several ways to figure out reasonable rental rates, according to Iowa State Ag Specialist Don Hofstrand found here. He suggests many methods are available to calculate reasonable cash rents, including

1.)what others are charging/paying,

2.)average yields,

3.)share of gross crop value,

4.)return on investment,

5.)crop share equivalent,

6.) and the tenant’s residual.

A fair rent is limited only by the creativity of the operator and landowner.

University of Georgia Extension Economist Dr. Cesar Escalante has done some work on surveying growers and landowners on cash rental rates. You can find his latest survey here on the extension economics website.

1 comment:

UGA Thomas County Extension said...

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