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Serving: MO

Cash Rent Competition

Improved crop prices will have Missouri crop growers jockeying for best cash rental rates and for the best cropland.

Higher commodity prices means that Missouri crop producers better be prepared to pay higher cash rent on leased acres.

USDA/NASS's annual publication "Land Values and Cash Rents," released Aug. 3, says the U.S. average cropland rent in 2007 is $85 per acre, up $5.50 from the year before. The average U.S. pasture rent this year is $12 per acre according to USDA, up from $10.80 last year.

Ron Plain, University of Missouri agricultural economist, says these increases may sound small, but reminds producers that crop prices really only took off last September. "Most of the cash rent being paid this year was negotiated when corn was below $2.50 per bushel," he notes.

Plain's expectation is that cropland cash rent will double between 2006 and 2012. Pasture rent will go up too, but not as extreme. MU's agricultural economics department conducts a rental survey every third year, with the latest conducted in 2006, so it does not have reported values for 2007.

In its spring 2006 survey of 223 Missouri farmers, the average annual cash rent paid per acre for crops was:
Irrigated corn - $97.04
Dryland corn - $79.42
Soybeans - $77.57
Wheat - $70.34
Alfalfa - $63.06

Plain's best advice on negotiating cash rent has been the same all year: "If you are a tenant, lock in your current cash rent for as many years as you can. If you are a landlord, get rid of your tenant as soon as you can."

Plains says there have been a number of cases around the Midwest this year where landlords have put cropland up for bid and have more than doubled what they were receiving. "Tenants who can lock in 2006 rates should do well compared to what others are paying," he says.

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