The downturn in commodity prices is starting to put serious pressure on producers across the country that rent most of their farmland. A report from DTN says that group most likely consists of young farmers and experienced operators who rapidly expanded when $8 corn was about to end. Cash rents have not adjusted to the lower commodity prices as quickly. A recent Iowa State University survey of cash rents shows a price of $270 per acre in 2013 has only come down to $230 an acre in 2016. University of Illinois economist Gary Schnitkey estimates farmers in his state lost $101 dollars an acre on cash rent land, and only $1 per acre on land they owned.
Working capital drops based on the amount of land farmers rent. An Illinois study said farmers who rent 25 to 50 percent of their land had about $70 dollars more per acre in working capital than 100 percent cash renters from 2003-2008. After commodity prices dropped, that gap jumped to $190 dollars an acre.
Source: NAFB News Service