Consequently, he says the lower corn prices will make it more difficult for operators to meet the costs of other inputs, including land rent, which has risen about 50 percent in the past five years, he says. And he adds, “A recent Iowa State University survey looking at land tenure indicates that about 16 percent of the cash rent leases in Iowa have attempted to balance out some of the risks of price and yield volatility by going to some type of flexible cash rent lease. As volatility continues for both grain prices and crop inputs, we may see more usage of flexible leases across the state.” Liebold says many of the cash rent leases will have to be reviewed, based on the fact that rental rates are now on the high side for the level of productivity for that land.
Lower corn prices will make it more difficult for farm operators to pay higher cash rents for farmland as seen in the past few years. Rents have risen an average of 50 percent over the past five years along with higher commodity prices. With corn prices dropping rapidly for the 2014 harvest, the ability to pay high rates of cash rent will be challenged.
Source: Farm Gate Blog