Young farmers grapple with high cash rents

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From left, Eli Klokkenga and Blair Bruns, with the Logan County Farm Bureau Young Leaders; and Reid Thompson, with Hertz Farm Management, talked about some of the challenges facing young farmers on a recent edition of the “RFD Today” radio program. (Photo by Mike Orso)

By Dan Grant

It’s often an honor to lead the state in a statistical category.

However, when Logan County Illinois Farm Bureau Young Leaders found out their county had the highest average cash rent in the state at $289 per acre this year, according to USDA, they didn’t exactly celebrate with chants of “we’re No. 1.”

Logan County Young Leaders instead decided to let the numbers do the talking. They publicized the plight many farmers currently face with high input costs, including cash rent, and declining farm income and tighter margins.

Blair Bruns, a member of the Logan County Young Leaders, led the informational campaign by writing an editorial about the situation, which appeared in the local newspaper.

“I decided to write an article about where our cash rents are, compared to production. I wanted to keep emotion out of it and stick to facts,” Bruns told the RFD Radio Network®. “The purpose of the article was to help the general public learn more about ag and be more familiar with what’s going on (financially).”

Video: Eli Klokkenga, Reid Thompson and Blair Bruns discuss the tough economic realities young farmers currently face.

Logan County sits in one of the most competitive areas of the state for rental bids. Nearby counties also come in high on average rent rates, including Sangamon ($286), Piatt ($274), Champaign ($271) and Christian ($267) counties.

But crop production in Logan County, which features a mix of Class A soil with lighter soils to the west, doesn’t match up with the steep rents, according to Bruns.

Logan County corn yields from 2014-16 averaged 207.7 bushels per acre which, impressive as it may be, ranked just 14th statewide.

That means Logan County farmers pay an average of $1.45 in rent for every bushel they produce, which ties Montgomery County as the highest figure in that category statewide, Bruns noted.

“We’re just trying to create awareness of how these figures look right now,” said Eli Klokkenga, president of the Logan County Young Leaders. “Cash flows aren’t matching up with high cash rents, although everyone’s risk is different.”

Reid Thompson, a Young Leader who farms in McLean and Ford counties and also works for Hertz Farm Management, believes some of the high rental rates are due to strong competition among farmers and economic pressure on landlords caused by big increases in property taxes, which climbed nearly 10 percent annually the past decade.

“There are farmers with larger economies of scale who force those (cash rent) averages higher,” Thompson said. “It’s hard on younger farmers (who often don’t have as much equity).

“As you look at Logan County and surrounding counties, they’re in one of the most competitive markets (in the state),” he noted.

A key to cash rent negotiations moving forward in many areas is to get rates back in line with the historical range of about 35 to 40 percent of gross income, according to Thompson. There were cases of farmers paying more than 50 percent of their gross income just for cash rent in recent years.

“As we move forward, we want to put farmers and landowners in good position to have success,” Bruns added.

Content for this story was provided by FarmWeekNow.com.

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