Information on average rental prices in your county can be found in the following report, based on survey data from the USDA`s National Agricultural Statistics Service for Michigan County. A copy of this whole series can be accessed in the fact sheet format at the following web address. There are pros and cons to this type of provision. Both parties will know exactly what the rent will be at the beginning of the agreement. This eliminates uncertainty and allows both parties to plan with confidence. A fixed cash lease is a way to secure bets – the payment will be equal to a bumper year or a drought. Ad hoc federal aid is the key to profits: without ad hoc federal aid, farmers` yields would have been negative in 2019 and 2020 and probably negative in 2021. One can speculate on whether or not to grant this aid. Faced with these uncertainties, it will be difficult to set cash rents for 2020.
Continuing to set cash rents at the current level will result in significant losses in the absence of ad hoc payments from the federal government. Taylor says survey data at KSU show that the reliability and reputation of farmers is one of the key determinants in the choice of a tenant by a landlord. “The rent rate was at the bottom of our surveys,” she says. “Owners want to make money, but they know it`s not easy to find a good tenant. They want the land to be supplied. Cash grain prices, which are well below 2019 levels, are forcing farmers to review their leases for 2021. Illinois farmers, Can Iowa and Indiana afford a cash rent of ¢222, ¢230 and ¢194 per hectare if the average price of corn and soybeans is expected to be ¢3.35 per hectare in 2020 (minus ¢25 compared to the previous year) and ¢8.50 (minus ¢5 from the previous year)? A Flex lease is a way to share the risks and benefits of a plant production system. Often, the formula can promise a basic cash rental price, which is often paid in advance, with a possible bonus during the harvest, based on the gross value (price of yield time) of the rent of the crop. Flex tenants can get much higher rents, perhaps better than some of the highest rents in the area. In the case of a baillist, the tenant is only required to pay the rate of the basic fund. This option has become very popular in much of Michigan in recent years, with commodity prices increasing much more than most expected. The use of this type of agreement has given the landowner high premiums. The comfort level of risk acceptance has an impact on the flex rental decision, with some landlords favouring guaranteed cash rents.
Some flex agreements offer a fixed price per bushel, multiplied by the average yield of maize for this field. (Example of maize: 1 times the average yield, i.e. 150 bushels per hectare, produces a cash rent of 150 $US per hectare.) This relieves the landowner of the risk of marketing and production and links the rental price to the production capacity of each field, which is good for the tenant. Over the years, producers have leased farmland, also known as swapping ground, for a variety of reasons that use a wide range of types of agreements. The nature of the agreement generally has a lot to do with how a landowner wants to participate in plant production on his territory.