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Report: Landowners feeling farm cost pressures, too

Agriculture.com Staff 11/25/2008 @ 7:26am

High crop input costs and aren't just making things tough for farmers nowadays. Landowners who depend on crop income for their share of the farm's returns are feeling the heat, too.

That's according to a recent report by University of Illinois ag economist Dale Lattz. When entering into crop share leases with farmers, much of what ends up being the final rent paid comprises projected returns from the crop, and that figure is shaped largely by crop prices and input costs.

In the last decade, returns to landlords in Illinois have risen steadily, according to a study by the Illinois Farm Business Farm Management (FBFM) Association. 2007 saw the highest average returns, capping a trend that began in 1998, the study shows.

"Since 1998, the highest landlord net return per acre for the most productive soil occurred in 2007 with a return of $226 per acre," Lattz says. "The second highest was in 2006 with a net return of $152 per acre. The lowest net return, $84 per acre, occurred in 1998. The second lowest net return of $88 per acre occurred in 2001."

Though a clear upward trend in landlord returns can be seen in numbers like these, that doesn't mean it's going to continue, Lattz says. Today's volatile grain markets and still-rising input costs may cause the increase in returns to level off eventually. Watch these two factors for direction in putting together crop share leases in the future, he recommends.

"Net returns have been increasing significantly the last two years. Net returns based on a four-year moving average reached their low point in 2001 and 2002 and have increasing since then," Lattz says. "Future returns to landowners utilizing crop share leases, to a great extent, will depend on the level of corn and soybean prices and the degree of continued increases (or decreases) in input costs."

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High crop input costs and aren't just making things tough for farmers nowadays. Landowners who depend on crop income for their share of the farm's returns are feeling the heat, too.

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