Despite a prolonged decrease in the price of many farm commodities, the U.S. Department of Agriculture’s state-level estimates of cash rents for cropland and pasture in 2019 revealed an increase. The national average rental rate for all cropland was at $140 per acre, an increase of $2 per acre or 1.4 percent from prior-year levels.
The average rental rate for irrigated cropland was $220 per acre, an increase of $5 per acre or 2.3 percent from 2018. For non-irrigated cropland the average rental rate was $127 per acre, an increase of $2 per acre or 1.6 percent from the prior year.
The average rental rate for pasture was $13 an acre, an increase of 50 cents or 4 percent from prior-year levels. But in inflation-adjusted dollars only irrigated-cropland- and pasture-rental rates were more than prior-year levels; non-irrigated-rental rates were outpaced by inflation.
Every other year the USDA’s National Agricultural Statistics Service releases county-level cash rents for non-irrigated and irrigated cropland as well as for pasture, for all counties with more than 20,000 acres of cropland and pasture. The most recent release in September 2019 showed county-level rental rates for non-irrigated cropland ranging from less than $10 per acre in several Western states to more than $250 per acre across portions of the Corn Belt in Illinois and Iowa. More than 200 counties across the Corn Belt had county-average rental rates at more than $200 per acre, with the greatest rental rate of $297 per acre in Moultrie County, Illinois.
The national average rental rate for irrigated cropland in 2019 was $220 per acre. At the county level, irrigated-rental rates varied.
- Rental rates were less than $100 per acre in many Western states.
- Rental rates were between $100 and $200 per acre in portions of the Southeast, the Central Plains and along the Mississippi.
- Rental rates were more than $500 per acre in portions of California.
- Irrigated-cropland rental rates were the most in Ventura County, California, at $2,200 per acre. And 178 counties had irrigated rental rates at or more than the national average.
While the national average pasture-rental rate was $13 per acre in 2019, many counties had an average pasture-rental rate of more than $13 per acre. Of the 1,870 counties reporting pasture-rental rates, 73 percent had rental rates at or more than $13 per acre. Likely due to competition with cropland and livestock density, pasture-rental rates were the most – more than $25 per acre – in portions of the Corn Belt – Minnesota, Wisconsin, Missouri, Nebraska and Kansas. Snohomish County, Washington, had the greatest average pasture-rental rate at $115 per acre.
It’s no secret that the farm economy – net farm income – has decreased by more than 30 percent since 2014. Excluding federal support, net farm income has decreased by almost 40 percent since 2013. Depressed commodity prices have decreased cash receipts from crops by almost 20 percent from their 2012 best. Depressed livestock prices have also resulted in a 16 percent decline in cash receipts for livestock producers.
Given the decrease in farm profitability, cash rents were expected to decline but that’s not been the case nationwide. For non-irrigated-cropland cash rents, 67 percent of counties have greater cash rents today than in 2013. The only area of the country with a big concentration of lesser non-irrigated cash rents is in the western Corn Belt, where many county cash rents have declined by at least 10 percent. Like non-irrigated cropland, irrigated-cropland cash rents have increased across many portions of the country. Areas with lesser irrigated cash rents mirror areas with lesser non-irrigated cash rents in portions of the western Corn Belt.
While lesser cash rents for cropland were concentrated in the Midwest, across much of the United States and even in the Midwest pasture-rental rates have increased substantially. In some cases cash rents for pasture land have more than doubled. The increase in pasture cash rents can be explained by increases in the beef-cattle herd, fewer acres of pastureland and – anecdotally at least – increases in cash-rental rates demanded by private and large-scale ranchland owners.
The USDA recently released updated cash-rental rates for cropland and pasture for 2019. Cash-rental rates for non-irrigated cropland and pasture are the most in portions of the Midwest where crop yields are the greatest. Cash-rental rates for irrigated cropland are the most in areas with greater concentrations of specialty crops. Outside of portions of the Midwest, most cropland-rental rates have increased despite the downturn in the farm economy.
Given current expectations for farm income to improve in 2019 due to federal assistance, an anticipated inflation level of 2 percent and decreased interest rates, the demand for agricultural land – cropland or pasture for rent – is likely to remain competitive going into 2020. The demand would likely be enhanced by welcome news on the trade front, including but not limited to the U.S.-Japan agricultural agreement, the passage of the U.S.-Mexico-Canada Trade Agreement and a resolution of normalized – and fair – trade with China.