The decision of whether a producer should continue to farm high-cash rent acres has become a popular topic in the face of low commodity margins. University of Illinois Extension Ag Economist Gary Schnitkey explained that cash rents have increased sharply since 2015 while farmer returns have averaged $103 per acre since 2000. Over this timeframe, inflation has driven up input prices and cash rents.

University of Illinois Extension Ag Economist Gary Schnitkey has pondered the question surrounding high-cash rent acres and developed two scenarios. One is for well-established farmers with some owned land and the other is for younger farmers who own less and have more debt.

Schnitkey said well-established farmers who own land have more options since it is easier to make a profit on paid-off owned acres. These farmers may choose to continue paying higher cash rent based on individual scenarios. Many may ride out the lean years while building equity in the good years.

Schnitkey advised younger farmers with more debt to consider how long they can pay higher cash rents. Finding another source of income may be necessary for this group to survive a period of low commodity prices.

Read more about strategies to address higher cash-rent prices here.