Submitted by Carla Nemecek, Southwind Extension District Director
If you are either a landlord or a tenant, you need to take the time to look up the 2018 Kansas County-Level Cash Rents for Non-Irrigated Cropland. With spring only a month away, farmers and ranchers are ready to get into the field and making preparations to get the cows back out to pasture. That also means that cash rental rates are an important topic and likely the reason the Extension office has had requests for our updated cash rental rates in Allen, Neosho, and Bourbon Counties. This important resource offers average rental rates for non-irrigated cropland across the state, making it a tremendously valuable document.
The rental rate estimates provided in this publication are calculated for a newly negotiated, equitable lease for the 2018 crop year. The rental rate estimates reflect what a typical producer could afford to pay, given expected profitability in 2018. They do not necessarily reflect what people are paying for leased land or at what rental rate the market will ultimately adjust to if farm profitability remains low.
Profitability in the Kansas farm sector has declined dramatically in the past two years. According to Kansas Farm Management Association (KFMA) data, net farm income per operator declined statewide from $95,355 in 2014 to $8,451 in 2015, with a rebound to $55,790 per operator in 2016 (Figure 1). The 2017 crop year is likely to be similar to 2016 in profitability, although the impacts of low profitability are highly varied across the state. Counties with a higher proportion of wheat production, while enjoying above-average yields in 2017, faced low cash prices due to basis levels well below historical averages. Counties with a relatively high proportion of soybean production, however, had a good year of high yields and prices. The diversity of expected profitability for 2018 manifests in the rental rate estimates shown in this publication.
The recent decline in farm profitability puts producers in a difficult situation. Producers do not want to lose land if they can possibly afford to keep it because the capital investment (e.g. machinery purchases, breeding herd size) and labor decisions they made over the past several years were based on the amount of land they had to farm. This will lead many to pay more for the land than estimates of expected profitability suggest they can pay and keep rental rates from falling at an accelerated rate, at least in the short-term. Over a longer period of time, if profitability remains low, rental rates will continue to decline as producers burn through existing working capital or equity and are unable to continue to pay higher rates.
Anyone can stop by the Southwind District offices in Erie, Fort Scott, and Iola and pick up a copy of the Cash Rental Rate document, or you can also download it at www.agmanager.info under the farm management link.