2011 Cash Rental Rates in Missouri

Ronald L. Plain
MU Extension Economist
Department of Agricultural and Applied Economics

Joyce White
Project Coordinator
Department of Agricultural and Applied Economics

Note
Average rents are weighted by number of acres rented. Size is a simple average of the acreage of the parcels reported.

In the summer of 2011, 226 Missourians responded to a mailed survey and provided information on their cash rental arrangements for farm property. A summary of their rates for Missouri cropland, pasture, farm buildings and fee hunting is shown in the following tables. As expected, most rates had increased since our last survey.

This guide should not be used as the sole basis for determining your rent, but it may provide a reference as you consider the factors unique to your situation. The acres of land available for rent (supply) and the number of tenants wanting to rent for cash (demand), as well as production costs and market prices, can affect the amount of rent negotiated.

Table 1. Cash rent paid for Missouri crop and pasture land in 2011.

Notes
Average rents and yields are weighted based on the number of acres rented. The mid rent in the range has an equal number of responses below and above it.

Table 2. Cash rent paid for Missouri cropland in 2011 by yield and acreage.

Notes
Average rents are weighted by number of acres rented. Size is a simple average of the acreage of the parcels reported.

Table 3. Charge for pasturing cattle in Missouri by stocking rate in 2011.

Table 4. Rental rates for Missouri farm buildings in 2011.

Table 5. Multiyear comparison of Missouri cash rental rates.

Table 6. Hunting leases in Missouri, 2010 to 2011.

This year’s survey included our first attempt to determine charges for lease hunting (Table 6). The number of responses was small, so the averages may not be an accurate reflection of Missouri rates. Several landlords indicated they do not charge for hunting and therefore were not included in the averages.

Cash renting defined

In a cash rental agreement, a tenant pays a landowner a fixed amount of money per acre (or other unit of measure) for the use of resources, such as land or improvements. No nonmonetary payment or share of production is involved. The rates are commonly expressed as annual rates per acre for cropland and pasture. However, pasture may also be cash rented by charging a fixed rate per animal placed on the pasture for a specific period of time.

Storage facilities, such as grain bins and equipment storage structures, are also rented for cash. Rates are usually based on size or capacity for a specific use and time period, such as grain bins by capacity or a storage rate per bushel per month or per year. Use or availability of auxiliary equipment and utilities may also affect the rate.

A written lease that describes the terms of the agreement is recommended. A cash lease usually includes restrictions on use, such as which crops can or cannot be grown on specific fields and the degree of fertility that must be maintained. Pasture or livestock facilities may specify the number of animal units allowed. Storage facilities may specify type of crop to be stored and payment for utility usage. All cash leases should specify the amount of rent due, the time and method of payment and the duration of the lease. Apart from these terms, the tenant is free to plan production or use of facilities. 

It is common practice for the tenant to pay all costs involved in raising the specified crops during the period of the lease. Landowners normally pay for improvements expected to endure beyond the period of the lease, as well as expenses related to property ownership.

Pros (+) and cons (-) of cash renting

The tenant

+ Is relatively free to make management decisions and develop a business unit

+ Receives all profit resulting from higher yields or higher commodity prices, which adds an incentive for higher production.

+ May enroll in government programs and receive entire payment.

-  Has increased risk because rent is fixed regardless of production.

-  Can have large capital requirements for production expenses.

-  Can have rent increased for doing a good job because as revenue increases, landowner may attempt to negotiate a higher rent.

The landowner

+ Is assured of a specific level of income.

+ Is not required to tie up cash in the production process.

+ Has no worries about storing or marketing crops.

-  In good years, does not receive as much money as he or she would in a crop-share arrangement.

-  Worries that the tenant will not maintain the property.

-  Has little chance to do income tax management.

High rents increase the tenant’s risks but benefit the landowner. A variable or flexible cash rent based on yields, prices or both can help distribute risk. It is suggested that a proposed flexible agreement be reviewed by the local USDA Farm Services Agency office for classification before it is finalized.

For information on other types of rental arrangements and lease forms, contact the agriculture business management specialist at your local MU Extension center.

G427, revised August 2011