2008 Cash Rental Rates in Missouri

2003 Cash Rental Rates in MissouriRon Plain and Joyce White
Department of Agricultural Economics

In the summer of 2008, 207 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, pasturing livestock and whole farms is shown in the following tables. As expected, most rates have 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 2008.

Type of land Average rent per acre Range in rents Average yield per acre Number of responses
Low Mid High
Cropland
Corn, dryland $97.95 $20 $100 $175 135 bushels 160
Corn, irrigated $147.99 $125   $150 175 bushels 4
Soybeans, dryland $96.91 $20 $95 $175 42 bushels 144
Wheat, dryland $86.52 $18 $75 $140 56 bushels 27
Double-crop wheat-soybeans $104.69 $40 $75 $150 wheat
56 bushels
beans
33 bushels		 19
Alfalfa hay $61.82       3.25 tons 3
Grass hay $30.31 $13 $25 $60 2.86 tons 19
Pasture and grazing land
Good pasture (less than 4 acres per 1,000 pound cow per year) $29.95 $10 $30 $65   98
Fair/poor pasture (more than 4 acres per 1,000 pound cow per year) $22.34 $7.50 $25 $40   39
Timber pasture $7.03 $4 $8.69 $20   8

Note
Average rents and yields are weighted by the number of acres rented.
The mid rent in the range is the rent that has an equal number of responses below and above it.

Table 2
Cash rent paid for Missouri cropland in 2008 by yield and acreage.

Average yield per acre Average rent per acre per year Average size (acres) Number of responses
Corn
Less than 100 bushels $92 153 6
101 to 120 bushels $85 172 41
121 to 130 bushels $87 232 31
131 to 140 bushels $87 272 21
141 to 150 bushels $114 156 26
151 or more bushels $125 247 22
Soybeans
25 to 34 bushels $59 126 5
35 to 39 bushels $59 267 25
40 to 44 bushels $101 189 52
45 to 49 bushels $107 207 31
50 to 54 bushels $119 220 17
55 to 60 bushels $129 275 5
Wheat
35 to 45 bushels $78 132 9
46 to 55 bushels $82 64 6
56 to 65 bushels $106 84 6
66 or more bushels $90 201 5
Grass hay
2 or less tons $22 44 7
2.5 to 3.5 tons $35 115 7
4 or more tons $29 148 2

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

Table 3
Charge for pasturing cattle by stocking rate (Missouri, 2008).

Type of rate Average charge Range in charges Average stocking rate (animal units per acre) Average time on pasture Number of responses
Low High
Per cow-calf per month $9.44 $4.00 $27.00 .35 7.1 months 18
Per heifer per month $5.75 $3.50 $10.50 .54 6.8 months 4

Table 4
Rental rates for Missouri farm buildings in 2008.

Type of structure Basis of charge Average charge Range in charges Number of responses
Low High
Grain bin per bushel per month $.023 $.015 $.03 10
per bushel per year $.133 $.10 $.25 16
flat rate per year (rate x maximum. capacity of bin) $.115 $.028 $.32 22
Machine storage, enclosed per square foot per year $.20 $.094 $.417 10

Whole-farm annual rent

In our 2008 survey, six farms with 80 percent or more cropland averaged rent of $104 per acre; four farms with 75 percent or more pasture averaged rent of $25 per acre; and six farms with a mix of 85 percent or more pasture and waste averaged rent of $7 per acre. Farms with residences were not included. It was not clear what impact barns, bins, etc., had on rents, but productive capability of land appeared to be a major factor in all.

Table 5
Three-year comparison of Missouri cash rental rates.

Type of land Range in rents
2006 2007 2008
Cropland
Corn, dryland $79.42 $86.30 $97.95
Corn, irrigated $97.04 $127.72 147.99
Soybeans $77.57 $85.29 $96.91
Wheat $70.34 $77.18 $86.52
Double-crop wheat-soybeans $72.47 $93.31 $104.69
Grain sorghum $53.41    
Alfalfa hay $63.06 $52.73 $61.82
Grass hay $23.15 $26.32 $30.31
Pasture and grazing land
Good $26.00 $28.37 $29.95
Fair/poor $21.48 $20.98 $22.34
Timber pasture $12.14 $7.03 $7.03

What is cash renting?

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 — land and/or improvements. No non-monetary 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.

Entire farm units may be rented on an annual basis for a flat rate. These rates vary widely because the diversity of farm units in the amount and quality of the land as well as type and usefulness of buildings or facilities on the property.

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 productivity that must be maintained. Pasture or livestock facilities may specify the number of animals allowed. Storage facilities may specify the type of crop to be stored and/or 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 has free rein in planning 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. As indicated by our 2006 survey, sharing of expenses for durable fertility improvements is a consideration in multi-year crop and pasture leases.

Pluses and minuses of cash renting

The tenant

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

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

+ May enroll in government programs and receive entire payment.

- Has increased risk. Rent is fixed regardless of production.

- Can have large capital requirements for production expenses.

- Can have rent increased for doing a good job. As yields increase, landowner sees opportunity 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/she would in a crop-share arrangement.

- Worries that the tenant will let the place run down.

- 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 and prices can help distribute risk. However, adding variable or flexible features to a cash rental agreement can affect its classification for government programs and the distribution of payments. It is suggested that a proposed flexible agreement be reviewed by the local USDA Farm Services Agency office for classification before finalizing the agreement.

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

G427, revised October 2008

G427 2008 Cash Rental Rates in Missouri | University of Missouri Extension