September 10, 2025 • 21 mins
Purdue ag economists Todd Kuethe and Michael Langemeier discuss Indiana farmland cash rental rates on this, the second of two episodes reviewing the 2025 Purdue Farmland Values and Cash Rental Rates survey results. The survey shows Indiana cash rents continue to rise by about one and a half percent. The episode shares historical trends in cash rents, and how cash rents compare to share and flex lease rents, regional differences, net returns to land, and the increasing interest in flexible cash leases from both landowner and tenant perspectives. Additional resources and detailed survey results are available on the Center for Commercial Agriculture website.
You can find the FULL video episode on our YouTube channel. Visit https://youtu.be/6agOo0Pif9U to subscribe and watch.
To learn more about Indiana's 2025 farmland cash rental rates, listen to the first podcast in this series, episode #194 on the Purdue Commercial #AgCast.
Podcast provided by Purdue University's Center for Commercial Agriculture. Slides and the transcript from the discussion can be found at https://purdue.ag/agcast195.
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For the full August Purdue Agricultural Economics Report, visit: https://purdue.ag/paer.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
Welcome to Purdue Commercial Ag Cast,Purdue University Center for Commercial
Agriculture's podcast featuring farmmanagement news and information.
I'm your host, Michael Langemeier,Director of Purdue Center
for Commercial Agriculture.
And joining me today is Todd Kuethe,the Todd Kuethe, Professor and Schrader
Endowed Chair in Farmland Economics.
Today we're gonna be talking aboutcash rents coming from the 2025
(00:28):
Purdue Farmland and Cash Rent Survey.
And then we're also going to, at theend, compare trends in cash rents to
share lease rents and flex lease rents.
The 2025 Purdue Farmland and CashRent Survey is on the Center for
Commercial Agriculture website, soyou can check out more detail there.
And we will also have some slidesrelated to this podcast on the website.
(00:49):
So Todd, let's get rolling here.
We'll start by just looking at someof the cash rent survey results.
Before we do that, talk a littlebit about the history of this
survey and who is surveyed.
Yeah.
Thank you.
I imagine a lot of our listenerswill be familiar with the survey.
It's been around since the mid1970s here in the department.
And the real push for that atthe time is there was very little
(01:12):
information about land values.
That's really the prime driver.
But then also cash rents.
And so we survey every Junepeople who interact with the land
market as part of their daily job.
So we have a lot of rural appraisers,land brokers, we have some ag
lenders in there, professional farmmanagers, and a few farmers as well.
(01:34):
And so one of the things to kindof keep in mind is that that is the
population that generally works withlike professionally managed land or
interacts kind of in the sales market.
We also ask them about cash rents.
For the land values, which we'lldiscuss in a separate episode, we're
asking about this current June,but we also ask about the previous
December what they expect to come.
(01:55):
The thing that sort of differentiatesour survey from some other sources
of information is that we splitthe state into six regions,
and three land quality grades.
So at the state level and across thoseregions, we give a a estimated cash rent
for top, average and poor quality land.
And that's just an annual cash rent,sort of your old fashioned cash rent.
(02:17):
We don't define those land qualities.
We allow the survey respondents, sowe ask them about the county that
they operate in or work in, andthey provide what their estimate for
top, average and poor quality is.
And then they also give what theythink the current long-run corn
yield expectation would be there.
Right.
So not necessarily the annualvariation, but where do you sort of
(02:38):
see, what's kind of your expected yield.
And that allows us to put these thingsalso in a cash rent per bushel yielded.
Which is, you know, as we know, you travelacross the state of Indiana, there's a lot
of variation in land quality and markets.
But generally that rent per bushelis pretty stable across the state
and across the Corn Belt in general.
(02:59):
Right?
So you're kind of paying thefor the ability to produce corn.
That's a very good point.
And when I help people look at thiscash rent survey, and when I talk
to the ANR educators about using thesurvey results, I always point to
that cash rent per bushel, becauseyou can use it to interpolate.
And so the state average corn yieldin this year's survey was 199.
(03:20):
If you have 205 bushel corn, you usethat rent per bushel multiplied by 205,
and you have an estimate for cash rent.
So extremely valuable that we breakthis into top, average and poor, but
also tie that crop yield with it.
Typically the averagecorn yield follows trend.
That 199 is slightly above the trendin Indiana, but it's very similar
to the trend yield in Indiana.
(03:43):
So Todd talk a little bit about thehistory of cash rents from the survey
from 2000 all the way to today.
Yeah, so if we look at sort ofwhere we were now, I guess 25 years
ago, the cash rents have definitelyincreased, pretty much linearly, over
the last 25 years, where we see anuptick of a couple percent per year.
Other than we did have sort of in thatpost RFS, commodity price boom, where
(04:07):
we saw cash rent go up quite a bit.
And then they started to come down,post 2012 drought, and then kind
of leveled off or increased slowly.
And then over the last, coupleyears, we had another uptick,
just right after COVID.
And then, over the last two to threeyears, we've seen pretty stable,
I would say, modest increases.
(04:27):
And I think that's somewhat consistentwith other Corn Belt states.
However, I do think there's alittle bit more weakness in some
of the Western Corn Belt statesin terms of the 2025 cash rent.
But usually they followvery similar trends.
And so if you are listing from adifferent state, you can, you kind
of look at our trends and compareto trends of a survey in your state.
And then just remember that rentper bushel, as Todd said, is
(04:50):
applicable across the Corn Belt.
And the other thing I always point outis that cash rent is incredibly variable.
So it's no matter what you put out asfar as number of cash rent, you're gonna
anger at least half your audience, right,that either wants it higher or lower.
And part of that is 'cause, youknow, commercial operators really
are operating to support a household,are dealing with multiple landlords.
(05:12):
And each one of those rental contractswill be negotiated a little bit different.
And so there's, there's areally a wide variation.
This is just sort of your sort of central,
Yeah.
central measure to get at wherewe kind of headed over time.
Wouldn't necessarily call it a benchmark,but it's a value to start with.
Yeah.
I think it's a good value to startwith negotiations, and as Todd said,
you know, in some areas there's reallystrong demand for cash rent and ground.
(05:35):
Other areas it's not quite as strong, andso there's gonna be a lot of variability.
Let's just briefly look at the2025 state averages the values
and the percentage increases.
Yeah.
So, I guess one of the things thatthis year that kind of jumped out,
we had sort of a small increase, oneand a half, slightly less than 2% for
top, average, and poor quality lands.
(05:56):
And so relatively modest changes.
Also, the other thing kind of jumps out tome, we didn't cross any sort of threshold.
It seems like there's always sort of likea 25 to $50 threshold that when you cross
that, like if you go from 295 to 305,somehow that feels very different 'cause
you've moved up across that 25 threshold.
So we're still kind of within thoseranges where we were last year.
(06:19):
When we look at a lot of otherexpenses changing, in a lot of ways
this looks relatively modest comparedto some of the other prices that the
farmers are paying for production.
Yeah, definitely.
And this would be below inflation.
At least slightly.
You know, so that'simportant to point out.
What was the 2025 average fortop productivity, for example?
So for top productivity,we average at $318.
(06:40):
Average, we were at $264.
And then at the poorquality land about $207.
Yeah.
And in the yields forthat, the top was 230.
Average 199 and poor 170.
We don't actually survey for irrigatedcash rents in this survey simply because
there's just not as much irrigation asthere is non irrigated land in Indiana,
so that it would be really thin.
(07:01):
It would be hard to come up with thenumbers, but I always tell people,
you can still use this rent perbushel and use that for the irrigated.
So if you had 250 bushel yield, youcould use the average rent per bushel,
which for the top, if I remember right,was about 1.4 , 250 times 1.4, and
come up with a starting value at least.
And so that's the kind of wayI would approach information
(07:22):
that's not in the survey.
In addition to the state, we also.
Look at this in a regional basis.
We're not going to talk a lot aboutthis, but I did want to note that this is
available for people to take a look at.
Yeah, and it, again, it follows thepattern that we'd expect, right?
The more productive regions of thestate tend to have higher cash rents.
We did see more movement atthe regional level, right?
(07:45):
So we did see places that were growingby, you know, five to 6% or even
falling by sort of similar, you know,five to 10% throughout the state.
One of the things that kind of stood outagain, I'm not gonna go into detail here,
but I encourage people to take a lookat the report on the Center's website.
One of the things that did standout in the northern part of Indiana
(08:06):
and in central the top qualityground increased quite a bit.
Anywheres from 5.5% all theway up to 7.4 in the central.
And so when we talk about this one pointa half percent you know, there was,
there was differences across the state.
That's definitely the case.
And so take a look at that.
Now, on the regional basis, the data is alittle thinner by definition, so I always
(08:26):
encourage people because of that, tomaybe look at the last two or three year
reports and see what kind of the averagevalue was and, and so use more than one
starting point for your negotiations.
Particularly if there's a lot ofvariability in your region, like
there sometimes is in the south.
Well, and the other thing I alwayshave to kind of point out, I get
people that send me an email or callme and ask for like their county.
(08:48):
Right.
And I said, well, I really don'thave that kind of coverage.
And there is like the USDA cash rentsurvey that give another sort of idea, at
least how yours fits in with that region.
And those regions wereestablished a long time ago.
And so I often have people sortof say like, oh, I think this
county should be in this region.
I'm like, yeah, we can't change it now.
Right.
Without a time machine.
Yeah.
I hear the same thing.
(09:08):
I wanna talk a little bit about how thiscompares to the Ag Economy Barometer
I'll talk about the July results.
We asked the following question comparedto 2025, what are your expectations
for cash rents in your area in 2026?
Remember, this is a U.S. survey and thiswas specifically for people that grew
corn, soybeans, wheat or cotton in 2025.
(09:30):
73% said about the same.
And only 11% said lower.
And so I was a littlesurprised at these results.
And so stable, I think is thekey word, both looking at the
Indiana survey and nationally.
Yeah, I tend to agree.
Again, these categoriesaren't like tightly defined.
And so I think of aboutthe same personally as sort
(09:50):
of around 2% up or down.
And looking at the economy in general,if you asked me what I think next
year, I would say, yeah, I thinkwe're gonna kind of hold steady.
We're not gonna go up or downmore than 2%, in either direction.
So to me I think it makes sense.
It makes me a little bit, I don'thave the right word for it, not
excited, but relieved maybe, thatwe're sort of thinking of next year
(10:11):
to be kind of like a status quo year.
Used to the last several yearswhere, people are either thinking
things are gonna be great orthings are gonna be terrible.
I think brings a lot moreconfidence into the sector.
Definitely.
And we did have some years,examples of those is, ' 14 to '17.
There was quite a bit of downwardpressure during those years
because of some low net returns.
And then in '21, '22, as you said,there was a lot of upward pressure
(10:34):
on cash, rent and land values.
And so I agree.
Negative 2% to 2% I thinkis a very realistic range
where cash rents may end up.
And I feel like when I talk aboutcash rents if I ever say they should
be going down, then all the farmerstell me like, there's no way my
landlord would accept anything lower.
Or if I say like, well, there'ssome room for them to go up.
(10:55):
Then all the landlords cometo me and like, I couldn't
get my tenant to pay more.
Right.
So no matter which side, there'sthis real bargaining process.
Yes.
Right?
That really shakes out, Ithink, where things will move
And I've got a slidein here, in the slides.
If you wanna take a look at this, whatI've done is I've taken a look at net
return to land for a case farm in WestCentral Indiana and compared that to cash
rent, cash rents are much more stable thannet return to land because we're not gonna
(11:17):
negotiate 50 to a hundred dollar changes,in cash rents from one year to the next.
We're gonna gradually change those.
And this graph really illustrateshow flat cash rents have
really been, since really '22.
They've, up and down a little bit, butthey've been in a pretty tight range.
And they're probably gonna bein that tight range unless we
continue to see low net returns.
(11:38):
The last time we had a downwardadjustment in, cash rents.
We had about a five or six yearperiod, where the net return
to land was below cash rent.
Well, right now we got three years.
And so if this continues, I do think we'llhave quite a bit of downward pressure.
Maybe if not in '26, maybe '27.
One of the things that's really helpedthe forecast for net returns in '25
(12:00):
and '26, even though we won't receivethis money for quite a while yet, is
the safety net in terms of the ARCCounty program in particular, but
also the PLC program is gonna havesome pretty good payouts for the '25
crop and expected for the '26 crop.
That's really helpedstabilize the cash rents.
Without those payments, I thinkwe'd be looking at some rather
(12:21):
large declines in '26 cash rents.
And so when you're looking at net returns,make sure that you're looking at both
crop revenue and also at any possiblegovernment payments, that we might have.
Well, and I think one of the reasonswe see cash rents so stable over, I
mean, really kind of the last, youknow, 10 to 15 years is that we have
(12:41):
those periods where the net returns toland is so much higher than cash rent.
And we think about thisas an annual decision.
But I think when people are out therenegotiating, there's often a little
bit of like, well, I don't wannawalk away from this yet, and I still
have some money kind of saved over.
Right.
Another way to think that when in'21 and '22 when we had very high net
returns, people didn't think thosewere gonna continue indefinitely.
And now when we have these reallylow net returns, people don't think
(13:03):
they're gonna remain low indefinitely.
And so we think kind of, even though it'sa year to year negotiation, I think we
think longer term in terms of the netreturn when we're negotiating cash rents.
And that makes a lot of sense to me.
I'm just gonna briefly talk about,a case farm example that I have that
compares crop share lease, fixedcash lease and flexible cash lease.
(13:25):
And it estimates landownernet returns from 2007 to 2025.
So again, it's landowner net returns.
It's not tenant, net returns.
And the reason why I do this is forpeople, that may be wanting to look
at flex cash leases, to see whatwould've happened, historically, if
I would've used a flex cash lease.
I've got a very specific flex cash leaseExample, in these slides, there is a
(13:50):
lot of different flex leases out there.
I've got a fairly high baserate in this, flex lease, 90%.
I've seen that as low as 75%.
As you lower that base cashrent, you increase the possible
bonus because you need to.
Because you got a low base there.
And so to get back up to somethingthat's close to the market cash
(14:10):
rent over a period of time,you gotta have larger bonuses.
And so this is just one out of many,possible flex leases, just to give
you some idea of what's going on.
The crop share that's very typical inthe Eastern corn belt landowner pays
50% of seed, fertilizer, chemical, andcrop insurance and a hundred percent
of land ownership costs, of course,and then receives 50% of all revenue.
(14:32):
The keyword is all revenue, croprevenue, government payments, and
crop insurance indemnity payments.
And so this example assumesthat the landlord does have crop
insurance, just like the tenant.
Of course they purchase that separatelywith a share lease, and then they get
a share of the government payments.
And then the fixed cash lease isjust using the survey results.
(14:52):
The flex lease is a 90%of a base rent of 90%.
That means that you set the baserent at 90% of whatever the market
cash rent is in a particular year.
And landowner receives a bonus,50% of gross revenue above non
land cost plus base revenue.
I do have a couple example years inhere, so you can see how I calculated
(15:13):
the bonus for a year that has a bonusin a year that does not have a bonus.
And, if gross revenue is not abovethis trigger you just, the landlord
just gets 90% of the base rent.
But what this flex lease reallyallows for is, let's say heading
into the year, we are expecting trendyield in '26, and we're expecting
a relatively low corn price.
(15:33):
The forecast for, USDA marketingyear average, forecast for, the
next, ' 25, '26, year is only 3.90.
So let's say we had $4 corn price.
That's not a real high gross revenue,but let's say you enter one of these flex
leases and if the price does increasesubstantially, and or you have above
trend yields, you would receive a bonus.
(15:54):
And so you get additional, money,besides that 90% based rent.
And so that's the idea here.
The tenant likes this because, it kindof sets the downside, which we don't
do with the share lease necessarily.
And so, you know that, if thegross revenue's low, you only
have to pay 90% of the base.
And years when the grossrevenue's high, you do have to
give up some of your revenue.
(16:14):
But that's the trade off.
You do have someprotection on the downside.
In low income years, youhave to pay less rent.
And so I've got an example for 2022where there's actually a relatively
large bonus because, revenue is reallygood because of high corn prices.
And then, you can take a look atthese slides later if you want.
I've also got an article on the websitethat goes through the same example.
(16:36):
And then I have also have an example of2024, where the revenue was below, the
trigger and you did not have a bonus.
Think about slightly over halfthe years, since 2007, if you
backcast would've had a bonus.
And with the 90% base, you're notlooking at real large bonuses.
A hundred dollars would bea relatively large bonus.
(16:56):
But a hundred dollars on top ofbase rent would be pretty, pretty
sizable adjustment, to rent.
And then I've got some diagramsin there that compare, fixed cash
lease to crop share lease, and flexcash lease to fixed cash lease.
And what you see with thecrop share lease, for example,
is a lot more variability.
Essentially you hit home runs, in yearswhere the corn price is really good,
like, 2010, 2011, ' 12 and, 2021 and 2022.
(17:21):
And then in the other years,you do not hit a home run.
In fact, you strike outsometimes like ' 25.
In 25, the revenue isprojected to be fairly low.
So the return for share leasewould be relatively low in '25.
If you're looking from a tenant'sperspective, they kind of like these
crop share because you're sharing a risk.
But from a landowner's perspective, thisis more risky, than the fixed cash rent.
(17:45):
And so I understand why some landlordshy away from the crop share lease.
There's been a general trend away from thecrop share lease in the Eastern Corn Belt.
And I've also got a comparison with thefixed cash lease and the flex lease.
This looks a little bit like thecrop share lease, however, because
of that 90% base, you don't dropdown near as much in terms of your
(18:06):
revenue in the low corn price years.
And so '25, you're still gonnaget 90% of the market cash rent.
You're not gonna drop way below thatbecause you're sharing all the revenue.
And so there's a lot lessdownside risk from the landowner's
perspective, from the flex lease.
But it also allows you to hit a home run,if you will, in the high corn price years.
(18:27):
And so that's why there's more discussionof this type of lease, because of
that, protection on the downside,possibility of getting some rather
large rents in the good income years.
And you know, this is west centralIndiana where average productivity soil,
you're looking at, cash rents around 290.
That would be the recent cash rents.
And there was a couple years herewhere the flex rent was over 350.
(18:51):
So that gives you an idea how muchincrease in rent you possibly could get
if prices and yields are really good.
And then I do a comparison between thecrop share and the flexible cash leases.
And it just shows you, that theflexible cash leases, does have a little
more variability in the cash rent.
But it does protect us on the downside.
And at the same time, giveus a higher rent when crop
prices are relatively strong.
(19:12):
And so just food for thought.
Those that might be looking at FlexCash leases, I encourage you to
take a look at the example in theseslides, in the publication called,
Comparisons of Leasing Arrangements.
That's all on the website.
So, question for you about, it seemslike 10, 15 years ago there was a lot of
discussion about people switching to flex.
(19:32):
Are you still seeing as muchsort of movement towards flex
or is it kind of stabilized?
It always dies down when theprices are a little lower.
Oh, okay.
So there was actually, I was lookingat the, we don't actually do a
survey on this, but Illinois does.
The Illinois Farm ManagementRural Appraisers, they do an
annual survey, as you know.
Yep.
You work there for a while.
They do an annual surveyand Gary Schnitkey and Nick
Paulson summarized that.
(19:54):
And this last year in 2025, thepercentage that were interested
in flex rent was lower than ithad been, two or three years ago.
And so I think when prices arehigh, people say, yeah, I want
some of that revenue associatedwith those high crop prices.
They don't get so excited, particularlylandowners when prices are relatively low.
Now, tenants do, operators do becauseit's a mechanism to share risk.
(20:15):
Now you don't share as much risk asthe crop share, but you certainly,
share more of the risk thanyou would do with a fixed cash.
And so the operators really like this.
And so, you know, I'm talking fromthe landowner perspective, but I do
have a publication on the websitethat looks at this from the operators
or the tenant's perspective.
And, they like flex leasesin this current environment.
But no, I don't think there's gonna beas much interest in this, until we see
(20:37):
higher prices and we see those higherprices again, and they see those, revenues
are going up a little bit and or strongergovernment payments than, the landowners
get more interest in these flex leases.
So very logical, I think.
So that concludes thispodcast focused on cash rents.
As we said, there's, a lot moreinformation on the, Center for
Commercial Agriculture website.
(20:58):
I encourage you to take a look at that.
Also, as Todd noted earlier, we'regonna have a separate podcast
related to land values, so that thesepodcasts didn't get quite so long.
So I encourage you to also watch, listen,check out the slides, check out the
written material, related to land values.
Thank you for joining us.
Thank you.
Welcome to Purdue Commercial Ag Cast,Purdue University Center for Commercial
Agriculture's podcast featuring farmmanagement news and information.
I'm your host, Michael Langemeier,Director of Purdue Center
for Commercial Agriculture.
And joining me today is Todd Kuethe,the Todd Kuethe, Professor and Schrader
Endowed Chair in Farmland Economics.
Today we're gonna be talking aboutcash rents coming from the 2025
(00:28):
Purdue Farmland and Cash Rent Survey.
And then we're also going to, at theend, compare trends in cash rents to
share lease rents and flex lease rents.
The 2025 Purdue Farmland and CashRent Survey is on the Center for
Commercial Agriculture website, soyou can check out more detail there.
And we will also have some slidesrelated to this podcast on the website.
(00:49):
So Todd, let's get rolling here.
We'll start by just looking at someof the cash rent survey results.
Before we do that, talk a littlebit about the history of this
survey and who is surveyed.
Yeah.
Thank you.
I imagine a lot of our listenerswill be familiar with the survey.
It's been around since the mid1970s here in the department.
And the real push for that atthe time is there was very little
(01:12):
information about land values.
That's really the prime driver.
But then also cash rents.
And so we survey every Junepeople who interact with the land
market as part of their daily job.
So we have a lot of rural appraisers,land brokers, we have some ag
lenders in there, professional farmmanagers, and a few farmers as well.
(01:34):
And so one of the things to kindof keep in mind is that that is the
population that generally works withlike professionally managed land or
interacts kind of in the sales market.
We also ask them about cash rents.
For the land values, which we'lldiscuss in a separate episode, we're
asking about this current June,but we also ask about the previous
December what they expect to come.
(01:55):
The thing that sort of differentiatesour survey from some other sources
of information is that we splitthe state into six regions,
and three land quality grades.
So at the state level and across thoseregions, we give a a estimated cash rent
for top, average and poor quality land.
And that's just an annual cash rent,sort of your old fashioned cash rent.
(02:17):
We don't define those land qualities.
We allow the survey respondents, sowe ask them about the county that
they operate in or work in, andthey provide what their estimate for
top, average and poor quality is.
And then they also give what theythink the current long-run corn
yield expectation would be there.
Right.
So not necessarily the annualvariation, but where do you sort of
(02:38):
see, what's kind of your expected yield.
And that allows us to put these thingsalso in a cash rent per bushel yielded.
Which is, you know, as we know, you travelacross the state of Indiana, there's a lot
of variation in land quality and markets.
But generally that rent per bushelis pretty stable across the state
and across the Corn Belt in general.
(02:59):
Right?
So you're kind of paying thefor the ability to produce corn.
That's a very good point.
And when I help people look at thiscash rent survey, and when I talk
to the ANR educators about using thesurvey results, I always point to
that cash rent per bushel, becauseyou can use it to interpolate.
And so the state average corn yieldin this year's survey was 199.
(03:20):
If you have 205 bushel corn, you usethat rent per bushel multiplied by 205,
and you have an estimate for cash rent.
So extremely valuable that we breakthis into top, average and poor, but
also tie that crop yield with it.
Typically the averagecorn yield follows trend.
That 199 is slightly above the trendin Indiana, but it's very similar
to the trend yield in Indiana.
(03:43):
So Todd talk a little bit about thehistory of cash rents from the survey
from 2000 all the way to today.
Yeah, so if we look at sort ofwhere we were now, I guess 25 years
ago, the cash rents have definitelyincreased, pretty much linearly, over
the last 25 years, where we see anuptick of a couple percent per year.
Other than we did have sort of in thatpost RFS, commodity price boom, where
(04:07):
we saw cash rent go up quite a bit.
And then they started to come down,post 2012 drought, and then kind
of leveled off or increased slowly.
And then over the last, coupleyears, we had another uptick,
just right after COVID.
And then, over the last two to threeyears, we've seen pretty stable,
I would say, modest increases.
(04:27):
And I think that's somewhat consistentwith other Corn Belt states.
However, I do think there's alittle bit more weakness in some
of the Western Corn Belt statesin terms of the 2025 cash rent.
But usually they followvery similar trends.
And so if you are listing from adifferent state, you can, you kind
of look at our trends and compareto trends of a survey in your state.
And then just remember that rentper bushel, as Todd said, is
(04:50):
applicable across the Corn Belt.
And the other thing I always point outis that cash rent is incredibly variable.
So it's no matter what you put out asfar as number of cash rent, you're gonna
anger at least half your audience, right,that either wants it higher or lower.
And part of that is 'cause, youknow, commercial operators really
are operating to support a household,are dealing with multiple landlords.
(05:12):
And each one of those rental contractswill be negotiated a little bit different.
And so there's, there's areally a wide variation.
This is just sort of your sort of central,
Yeah.
central measure to get at wherewe kind of headed over time.
Wouldn't necessarily call it a benchmark,but it's a value to start with.
Yeah.
I think it's a good value to startwith negotiations, and as Todd said,
you know, in some areas there's reallystrong demand for cash rent and ground.
(05:35):
Other areas it's not quite as strong, andso there's gonna be a lot of variability.
Let's just briefly look at the2025 state averages the values
and the percentage increases.
Yeah.
So, I guess one of the things thatthis year that kind of jumped out,
we had sort of a small increase, oneand a half, slightly less than 2% for
top, average, and poor quality lands.
(05:56):
And so relatively modest changes.
Also, the other thing kind of jumps out tome, we didn't cross any sort of threshold.
It seems like there's always sort of likea 25 to $50 threshold that when you cross
that, like if you go from 295 to 305,somehow that feels very different 'cause
you've moved up across that 25 threshold.
So we're still kind of within thoseranges where we were last year.
(06:19):
When we look at a lot of otherexpenses changing, in a lot of ways
this looks relatively modest comparedto some of the other prices that the
farmers are paying for production.
Yeah, definitely.
And this would be below inflation.
At least slightly.
You know, so that'simportant to point out.
What was the 2025 average fortop productivity, for example?
So for top productivity,we average at $318.
(06:40):
Average, we were at $264.
And then at the poorquality land about $207.
Yeah.
And in the yields forthat, the top was 230.
Average 199 and poor 170.
We don't actually survey for irrigatedcash rents in this survey simply because
there's just not as much irrigation asthere is non irrigated land in Indiana,
so that it would be really thin.
(07:01):
It would be hard to come up with thenumbers, but I always tell people,
you can still use this rent perbushel and use that for the irrigated.
So if you had 250 bushel yield, youcould use the average rent per bushel,
which for the top, if I remember right,was about 1.4 , 250 times 1.4, and
come up with a starting value at least.
And so that's the kind of wayI would approach information
(07:22):
that's not in the survey.
In addition to the state, we also.
Look at this in a regional basis.
We're not going to talk a lot aboutthis, but I did want to note that this is
available for people to take a look at.
Yeah, and it, again, it follows thepattern that we'd expect, right?
The more productive regions of thestate tend to have higher cash rents.
We did see more movement atthe regional level, right?
(07:45):
So we did see places that were growingby, you know, five to 6% or even
falling by sort of similar, you know,five to 10% throughout the state.
One of the things that kind of stood outagain, I'm not gonna go into detail here,
but I encourage people to take a lookat the report on the Center's website.
One of the things that did standout in the northern part of Indiana
(08:06):
and in central the top qualityground increased quite a bit.
Anywheres from 5.5% all theway up to 7.4 in the central.
And so when we talk about this one pointa half percent you know, there was,
there was differences across the state.
That's definitely the case.
And so take a look at that.
Now, on the regional basis, the data is alittle thinner by definition, so I always
(08:26):
encourage people because of that, tomaybe look at the last two or three year
reports and see what kind of the averagevalue was and, and so use more than one
starting point for your negotiations.
Particularly if there's a lot ofvariability in your region, like
there sometimes is in the south.
Well, and the other thing I alwayshave to kind of point out, I get
people that send me an email or callme and ask for like their county.
(08:48):
Right.
And I said, well, I really don'thave that kind of coverage.
And there is like the USDA cash rentsurvey that give another sort of idea, at
least how yours fits in with that region.
And those regions wereestablished a long time ago.
And so I often have people sortof say like, oh, I think this
county should be in this region.
I'm like, yeah, we can't change it now.
Right.
Without a time machine.
Yeah.
I hear the same thing.
(09:08):
I wanna talk a little bit about how thiscompares to the Ag Economy Barometer
I'll talk about the July results.
We asked the following question comparedto 2025, what are your expectations
for cash rents in your area in 2026?
Remember, this is a U.S. survey and thiswas specifically for people that grew
corn, soybeans, wheat or cotton in 2025.
(09:30):
73% said about the same.
And only 11% said lower.
And so I was a littlesurprised at these results.
And so stable, I think is thekey word, both looking at the
Indiana survey and nationally.
Yeah, I tend to agree.
Again, these categoriesaren't like tightly defined.
And so I think of aboutthe same personally as sort
(09:50):
of around 2% up or down.
And looking at the economy in general,if you asked me what I think next
year, I would say, yeah, I thinkwe're gonna kind of hold steady.
We're not gonna go up or downmore than 2%, in either direction.
So to me I think it makes sense.
It makes me a little bit, I don'thave the right word for it, not
excited, but relieved maybe, thatwe're sort of thinking of next year
(10:11):
to be kind of like a status quo year.
Used to the last several yearswhere, people are either thinking
things are gonna be great orthings are gonna be terrible.
I think brings a lot moreconfidence into the sector.
Definitely.
And we did have some years,examples of those is, ' 14 to '17.
There was quite a bit of downwardpressure during those years
because of some low net returns.
And then in '21, '22, as you said,there was a lot of upward pressure
(10:34):
on cash, rent and land values.
And so I agree.
Negative 2% to 2% I thinkis a very realistic range
where cash rents may end up.
And I feel like when I talk aboutcash rents if I ever say they should
be going down, then all the farmerstell me like, there's no way my
landlord would accept anything lower.
Or if I say like, well, there'ssome room for them to go up.
(10:55):
Then all the landlords cometo me and like, I couldn't
get my tenant to pay more.
Right.
So no matter which side, there'sthis real bargaining process.
Yes.
Right?
That really shakes out, Ithink, where things will move
And I've got a slidein here, in the slides.
If you wanna take a look at this, whatI've done is I've taken a look at net
return to land for a case farm in WestCentral Indiana and compared that to cash
rent, cash rents are much more stable thannet return to land because we're not gonna
(11:17):
negotiate 50 to a hundred dollar changes,in cash rents from one year to the next.
We're gonna gradually change those.
And this graph really illustrateshow flat cash rents have
really been, since really '22.
They've, up and down a little bit, butthey've been in a pretty tight range.
And they're probably gonna bein that tight range unless we
continue to see low net returns.
(11:38):
The last time we had a downwardadjustment in, cash rents.
We had about a five or six yearperiod, where the net return
to land was below cash rent.
Well, right now we got three years.
And so if this continues, I do think we'llhave quite a bit of downward pressure.
Maybe if not in '26, maybe '27.
One of the things that's really helpedthe forecast for net returns in '25
(12:00):
and '26, even though we won't receivethis money for quite a while yet, is
the safety net in terms of the ARCCounty program in particular, but
also the PLC program is gonna havesome pretty good payouts for the '25
crop and expected for the '26 crop.
That's really helpedstabilize the cash rents.
Without those payments, I thinkwe'd be looking at some rather
(12:21):
large declines in '26 cash rents.
And so when you're looking at net returns,make sure that you're looking at both
crop revenue and also at any possiblegovernment payments, that we might have.
Well, and I think one of the reasonswe see cash rents so stable over, I
mean, really kind of the last, youknow, 10 to 15 years is that we have
(12:41):
those periods where the net returns toland is so much higher than cash rent.
And we think about thisas an annual decision.
But I think when people are out therenegotiating, there's often a little
bit of like, well, I don't wannawalk away from this yet, and I still
have some money kind of saved over.
Right.
Another way to think that when in'21 and '22 when we had very high net
returns, people didn't think thosewere gonna continue indefinitely.
And now when we have these reallylow net returns, people don't think
(13:03):
they're gonna remain low indefinitely.
And so we think kind of, even though it'sa year to year negotiation, I think we
think longer term in terms of the netreturn when we're negotiating cash rents.
And that makes a lot of sense to me.
I'm just gonna briefly talk about,a case farm example that I have that
compares crop share lease, fixedcash lease and flexible cash lease.
(13:25):
And it estimates landownernet returns from 2007 to 2025.
So again, it's landowner net returns.
It's not tenant, net returns.
And the reason why I do this is forpeople, that may be wanting to look
at flex cash leases, to see whatwould've happened, historically, if
I would've used a flex cash lease.
I've got a very specific flex cash leaseExample, in these slides, there is a
(13:50):
lot of different flex leases out there.
I've got a fairly high baserate in this, flex lease, 90%.
I've seen that as low as 75%.
As you lower that base cashrent, you increase the possible
bonus because you need to.
Because you got a low base there.
And so to get back up to somethingthat's close to the market cash
(14:10):
rent over a period of time,you gotta have larger bonuses.
And so this is just one out of many,possible flex leases, just to give
you some idea of what's going on.
The crop share that's very typical inthe Eastern corn belt landowner pays
50% of seed, fertilizer, chemical, andcrop insurance and a hundred percent
of land ownership costs, of course,and then receives 50% of all revenue.
(14:32):
The keyword is all revenue, croprevenue, government payments, and
crop insurance indemnity payments.
And so this example assumesthat the landlord does have crop
insurance, just like the tenant.
Of course they purchase that separatelywith a share lease, and then they get
a share of the government payments.
And then the fixed cash lease isjust using the survey results.
(14:52):
The flex lease is a 90%of a base rent of 90%.
That means that you set the baserent at 90% of whatever the market
cash rent is in a particular year.
And landowner receives a bonus,50% of gross revenue above non
land cost plus base revenue.
I do have a couple example years inhere, so you can see how I calculated
(15:13):
the bonus for a year that has a bonusin a year that does not have a bonus.
And, if gross revenue is not abovethis trigger you just, the landlord
just gets 90% of the base rent.
But what this flex lease reallyallows for is, let's say heading
into the year, we are expecting trendyield in '26, and we're expecting
a relatively low corn price.
(15:33):
The forecast for, USDA marketingyear average, forecast for, the
next, ' 25, '26, year is only 3.90.
So let's say we had $4 corn price.
That's not a real high gross revenue,but let's say you enter one of these flex
leases and if the price does increasesubstantially, and or you have above
trend yields, you would receive a bonus.
(15:54):
And so you get additional, money,besides that 90% based rent.
And so that's the idea here.
The tenant likes this because, it kindof sets the downside, which we don't
do with the share lease necessarily.
And so, you know that, if thegross revenue's low, you only
have to pay 90% of the base.
And years when the grossrevenue's high, you do have to
give up some of your revenue.
(16:14):
But that's the trade off.
You do have someprotection on the downside.
In low income years, youhave to pay less rent.
And so I've got an example for 2022where there's actually a relatively
large bonus because, revenue is reallygood because of high corn prices.
And then, you can take a look atthese slides later if you want.
I've also got an article on the websitethat goes through the same example.
(16:36):
And then I have also have an example of2024, where the revenue was below, the
trigger and you did not have a bonus.
Think about slightly over halfthe years, since 2007, if you
backcast would've had a bonus.
And with the 90% base, you're notlooking at real large bonuses.
A hundred dollars would bea relatively large bonus.
(16:56):
But a hundred dollars on top ofbase rent would be pretty, pretty
sizable adjustment, to rent.
And then I've got some diagramsin there that compare, fixed cash
lease to crop share lease, and flexcash lease to fixed cash lease.
And what you see with thecrop share lease, for example,
is a lot more variability.
Essentially you hit home runs, in yearswhere the corn price is really good,
like, 2010, 2011, ' 12 and, 2021 and 2022.
(17:21):
And then in the other years,you do not hit a home run.
In fact, you strike outsometimes like ' 25.
In 25, the revenue isprojected to be fairly low.
So the return for share leasewould be relatively low in '25.
If you're looking from a tenant'sperspective, they kind of like these
crop share because you're sharing a risk.
But from a landowner's perspective, thisis more risky, than the fixed cash rent.
(17:45):
And so I understand why some landlordshy away from the crop share lease.
There's been a general trend away from thecrop share lease in the Eastern Corn Belt.
And I've also got a comparison with thefixed cash lease and the flex lease.
This looks a little bit like thecrop share lease, however, because
of that 90% base, you don't dropdown near as much in terms of your
(18:06):
revenue in the low corn price years.
And so '25, you're still gonnaget 90% of the market cash rent.
You're not gonna drop way below thatbecause you're sharing all the revenue.
And so there's a lot lessdownside risk from the landowner's
perspective, from the flex lease.
But it also allows you to hit a home run,if you will, in the high corn price years.
(18:27):
And so that's why there's more discussionof this type of lease, because of
that, protection on the downside,possibility of getting some rather
large rents in the good income years.
And you know, this is west centralIndiana where average productivity soil,
you're looking at, cash rents around 290.
That would be the recent cash rents.
And there was a couple years herewhere the flex rent was over 350.
(18:51):
So that gives you an idea how muchincrease in rent you possibly could get
if prices and yields are really good.
And then I do a comparison between thecrop share and the flexible cash leases.
And it just shows you, that theflexible cash leases, does have a little
more variability in the cash rent.
But it does protect us on the downside.
And at the same time, giveus a higher rent when crop
prices are relatively strong.
(19:12):
And so just food for thought.
Those that might be looking at FlexCash leases, I encourage you to
take a look at the example in theseslides, in the publication called,
Comparisons of Leasing Arrangements.
That's all on the website.
So, question for you about, it seemslike 10, 15 years ago there was a lot of
discussion about people switching to flex.
(19:32):
Are you still seeing as muchsort of movement towards flex
or is it kind of stabilized?
It always dies down when theprices are a little lower.
Oh, okay.
So there was actually, I was lookingat the, we don't actually do a
survey on this, but Illinois does.
The Illinois Farm ManagementRural Appraisers, they do an
annual survey, as you know.
Yep.
You work there for a while.
They do an annual surveyand Gary Schnitkey and Nick
Paulson summarized that.
(19:54):
And this last year in 2025, thepercentage that were interested
in flex rent was lower than ithad been, two or three years ago.
And so I think when prices arehigh, people say, yeah, I want
some of that revenue associatedwith those high crop prices.
They don't get so excited, particularlylandowners when prices are relatively low.
Now, tenants do, operators do becauseit's a mechanism to share risk.
(20:15):
Now you don't share as much risk asthe crop share, but you certainly,
share more of the risk thanyou would do with a fixed cash.
And so the operators really like this.
And so, you know, I'm talking fromthe landowner perspective, but I do
have a publication on the websitethat looks at this from the operators
or the tenant's perspective.
And, they like flex leasesin this current environment.
But no, I don't think there's gonna beas much interest in this, until we see
(20:37):
higher prices and we see those higherprices again, and they see those, revenues
are going up a little bit and or strongergovernment payments than, the landowners
get more interest in these flex leases.
So very logical, I think.
So that concludes thispodcast focused on cash rents.
As we said, there's, a lot moreinformation on the, Center for
Commercial Agriculture website.
(20:58):
I encourage you to take a look at that.
Also, as Todd noted earlier, we'regonna have a separate podcast
related to land values, so that thesepodcasts didn't get quite so long.
So I encourage you to also watch, listen,check out the slides, check out the
written material, related to land values.
Thank you for joining us.
Thank you.
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