Cash rent, against what the ground can actually pay

Why this ratio and not the rent

Rent is fixed in the spring. Yield and price are not. That is the whole problem with judging a lease by the rent alone: the rent stops moving the day you sign, and everything that pays for it keeps moving for another nine months.

Expressing rent as a share of gross revenue puts the fixed number on top of the moving one. When corn is $6.00 and the county trends 200 bushels, $250 rent is about 21% of the gross. When corn is $4.00, the same $250 on the same ground is over 31%. Nothing about the lease changed. The arithmetic underneath it did.

Where these numbers come from

The rent is USDA NASS's county estimate from the Cash Rents Survey, a survey of roughly 280,000 farms and ranches run every year in every state but Alaska. The 2008 Farm Bill requires NASS to publish a mean rate for every county with at least 20,000 acres of cropland plus pasture. Results land each August and are not revised afterward. The Farm Service Agency uses these same county estimates to set market-based rates for programs like CRP.

The trend yield is mine, not USDA's: an ordinary least-squares fit through your county's NASS yield estimates over the last fifteen years, projected to the current year. It ships with its fit quality attached, and where a county has fewer than six real years of yield on record, no trend is shown at all rather than a number pulled through too few points.

Three things this data will not do

• It will not fill in your county if NASS didn't. Counties with too few survey responses are withheld. Where that happens you get a blank and a plain statement that NASS did not publish, never a neighbor's number wearing your county's name.
• It has no 2015. NASS ran no county Cash Rents Survey that year, so the series runs 2008–2014 and 2016 forward. The chart shows a hole. Drawing a line across it would be inventing a year.
• It is a county mean, not a rate card. Rents differ between farms on the same road — soil, drainage, field size, yield history, and how badly the neighbor wants it. Bring the mean to the conversation as a reference point, not a verdict.

Using it in an actual rent conversation

The common landlord conversation is a number against a feeling. This gives both sides the same arithmetic to argue about, which is usually a shorter argument. A few honest ways to run it:

• Put your real yield in. The county trend is a starting point. If your ground beats the county by fifteen bushels, type that in — a share of gross computed on somebody else's yield is not your ratio.
• Put your real basis in. The board is not what you get paid. Basis is the difference between the two, and over a 200-bushel acre, thirty cents is sixty dollars.
• Look at the history, not the level. A ratio means little in isolation and a lot next to the same county's last fifteen years.

What it deliberately will not do is tell you what to sign. That is between you, your landlord, and your own numbers.

Questions