By Gary Schnitkey, Nick Paulson, and Jim Baltz, Department of Agricultural and Consumer Economics, University of Illinois and Carl Zulauf, Department of Agricultural, Environmental and Development Economics. Ohio State University
We present information helpful in evaluating cash rent levels for the 2025 production year (see farmdoc daily, July 30, 2024). In recent years, average cash rents published by the U.S. Department of Agriculture have shown significant increases, with the impetus for those increases coming from above-average farming returns from 2020 to 2022. However, returns likely will be negative in 2024. As a result, a survey by the Illinois Society of Professional Farm Managers and Rural Appraisers suggests decreases in cash rents in 2025 are expected. Given that returns are expected to remain low in 2025, substantial declines in cash rents seem warranted. As a benchmark, reducing cash rents back to 2020 levels would help, particularly for cash rents that are at or above NASS averages.
Projected Farmland Returns
Negotiations for 2025 cash rents will occur against negative 2024 farmland returns. For example, our projections place returns at -$129 per acre for high-productivity farmland in central Illinois at average cash rent levels for the region, the lowest return since we began computing comparable returns in 2000 (see Figure 1). Those negative returns are $36 below the 2024 return of -$93 per acre. Before 2023, the lowest returns were in 2014 (-$3 per acre) and 2025 (-$10 per acre).
Average 2024 Cash Rents in Illinois
The National Agricultural Statistics Service (NASS) reported the average cash rent for Illinois in 2024 at $269 per acre, up by $10 per acre from $259 per acre for 2023 (see Figure 2). The 2024 rent is another new record for Illinois and continues a trend of significant increases since 2020. Between 2020 and 2024, average cash rents in Illinois increased by $47 per acre. From 2020 through 2022, returns were above average (see Figure 1), providing the impetus for increasing cash rents.
Summary
Significant declines in 2025 cash rents are expected and may be necessary given negative expected returns for 2024, and a continued low return outlook for 2025. As a benchmark, reducing cash rents back to 2020 levels would help, particularly for cash rents that are at or above NASS averages. Rents at 2020 levels still would have resulted in negative returns for 2024 in most cases.
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