Is a cash rent adjustment in order?
The 2020 financial outlook for corn and soybean farmers has changed significantly over the past two months.
With that in mind, University of Nebraska-Lincoln Extension Educator Allan Vyhnalek says it might be time for landlords and tenants to discuss whether their farmland cash lease agreement should be adjusted.
“Certainly, if you have a cash lease in place, you don’t have to adjust,” Vyhnalek says. “But I’m saying to landlords, ‘Hey, if you have a high dollar cash lease, you may have to consider some type of adjustment. Especially if you want to keep your farmer farming, and especially if you have economic considerations for your farmer—about what’s happening to him’.”
Using, as an example, a pivot irrigated field in eastern Nebraska with current rent and corn prices factored in, Vyhnalek says the rent payment would take 44 percent of the anticipated gross revenue from that field. He says that figure would typically be in the 25 to 35 percent range.
“If we’re not going to adjust rent for 2020, then that’s fine, we don’t have to—but we do need to strongly consider adjusting rent for 2021, unless the economic situation of today changes,” Vyhnalek says.
AUDIO: Allan Vyhnalek