Author: Brad Watkins

High input prices in recent years have significantly reduced profit margins for rice producers in the Mid-South. The negative impact of tightening profit margins is felt most acutely by rice producers renting cropland. A significant portion of rice ground in the region is rented using crop share arrangements, and the most common lease used is a net crop share lease. The terms of crop share leases differ by crop and region.  Typically for rice in the Mid-South, the landlord supplies the land and pays all below-ground irrigation expenses (well, pump, gearhead fixed expenses) in exchange for a share of the crop. The tenant pays all above-ground irrigation expenses (irrigation power unit fixed expenses, irrigation energy), supplies all machinery, and pays virtually all variable costs. The rice drying cost is the only variable cost shared between the two parties. Other crop share leases exist where specific costs like fertilizer are shared, but these lease types are less common than the net crop share lease. 

Net crop shares are very similar throughout the Mid-South. In Eastern Arkansas, the landlord’s share of the rice crop is typically 25%, but 20% crop shares are also common (ASFMRA, 2024). In Northeastern Louisiana, the landlord’s share of the rice crop is typically 20%. Crop share leases are used less frequently in Northwestern Mississippi relative to cash leases, but when a crop share lease is used, the landlord’s share of the rice crop is also typically 20%. 

Crop share arrangements tend to change little over time, but increasing crop prices, rising input costs, or new technologies make it occasionally necessary to reevaluate the equitability of crop share arrangements for both parties (NCFMEC, 2011). This article demonstrates the contributions approach as a method to calculate equitable crop and cost shares for rice rental leases. The first step is to calculate the percentage contribution provided by each party in value of non-shared expenses.  Remaining shared inputs and income are then shared in the same percentages as the collective non-shared contributions made by both parties. 

Table 1 demonstrates how the contributions approach reflects the typical net crop share lease used in the Mid-South. In this example, the only cost item shared is drying costs. All other cost items are contributed solely by the landlord or the tenant. Total non-shared contributions equal $1,311, of which the landlord provides $250 (19.1%) and the tenant provides $1,061 (80.9%).  The assumption then would be that drying costs and crop income would appropriately be shared at the same 19.1 / 80.9 percentages, which approaches the 20% landlord, 80% tenant split seen in many net crop share leases in the Mid-South.

Table 2 shows how the contributions approach may be applied to a crop share arrangement where several cost items are shared between the landlord and the tenant. In this table, the two parties share fertilizer, herbicide, and drying costs. The sharing of fertilizer and herbicide costs between the two parties is in accordance with the concept that yield-increasing inputs should be shared in the same percentage as the crop is shared (NCFMEC, 2011). An argument can be made that irrigation energy costs also fall into this yield-increasing input category. However, the cost of items to be shared or not shared in a crop share lease are based on negotiation between the tenant and the landlord. 

Note in this example that the landlord’s share of the crop becomes larger when more cost items are shared between the two parties. This result occurs because the total proportion of contributions made by the landlord (particularly the land contribution but also irrigation wells) becomes larger when more costs are shared between the two parties. The equitable crop shares for each party, based on Table 2, are 24.5% of the gross returns for the landlord and 75.5% of the gross returns for the tenant.

Table 1. Rice Net Crop Share Lease (Only Drying Expenses Shared)
Cost Items	Annual Cost a	Landlord Contribution	Tenant Contribution
Non-Shared Items:		$/acre
Land ($5,963/acre * 3.619%) b	216	216
Machinery Fixed Expenses	79		79
Machinery Repairs and Maintenance	18		18
Irrigation Fixed Expenses (Well, Pump, Gearhead)	34	34
Irrigation Fixed Expenses (Power Unit)	22		22
Irrigation Repairs and Maintenance	8		8
Survey and Mark Levees	5		5
Labor	55		55
Management (180 bu/ac * $6.75/bu * 7.5%) c	91		91
Seed	136		136
Fertilizer	160		160
Herbicides	130		130
Insecticide	9		9
Fungicide	10		10
Fuel	20		20
Irrigation Energy Costs	129		129
Crop Insurance	10		10
Scouting/Consultant Fee	8		8
Operating Interest	35		35
Custom Machinery Hire	87		87
Hauling	49		49
Total Non-Shared Costs	1,311	250	1,061
Percent of Specified Costs	100.00%	19.1%	80.9%
Shared Items:		$/acre
Drying	72	14	58
Total Shared Costs	72	14	58
Total Shared and Non-Shared Costs	1,383	264	1,120
Percent of Specified Costs	100.00%	19.1%	80.9%
Gross Return (180 bu/ac * $6.75/bu)	1,215	232	983
a Annual cost items except Land and Management are rice production costs averaged across 2024 University of Arkansas rice crop enterprise budgets.
b The land charge is calculated as the average value for irrigated cropland in Eastern Arkansas reported in ASFMRA (2024) ($5,963/acre) multiplied by the rent-to-value ratio for irrigated cropland obtained from USDA NASS Arkansas (2024) ($152/acre cash rent divided by $4,200/acre for irrigated cropland).
c The management charge is calculated as rice gross return multiplied by the mid-range of charges for professional farm managers (5 to 10%) reported in NCFMEC (2011).

Table 2. Rice Cost Share Lease (Fertilizer, Herbicide, and Drying Costs Shared)
Cost Items	Annual Cost a	Landlord Contribution	Tenant Contribution
Non-Shared Items:		$/acre
Land ($5,963/acre * 3.619%) b	216	216
Machinery Fixed Expenses	79		79
Machinery Repairs and Maintenance	18		18
Irrigation Fixed Expenses (Well, Pump, Gearhead)	34	34
Irrigation Fixed Expenses (Power Unit)	22		22
Irrigation Repairs and Maintenance	8		8
Survey and Mark Levees	5		5
Labor	55		55
Management (180 bu/ac * $6.75/bu * 7.5%)	91		91
Seed	136		136
Insecticide	9		9
Fungicide	10		10
Fuel	20		20
Irrigation Energy Costs	129		129
Crop Insurance	10		10
Scouting/Consultant Fee	8		8
Operating Interest	35		35
Custom Machinery Hire	87		87
Hauling	49		49
Total Non-Shared Costs	1,021	250	771
Percent of Specified Costs	100.00%	24.5%	75.5%
Shared Items:		$/acre
Fertilizer	160	39	121
Herbicides	130	32	99
Drying	72	18	54
Total Shared Costs	362	89	274
Total Shared and Non-Shared Costs	1,383	339	1,044
Percent of Specified Costs	100.00%	24.5%	75.5%
Gross Return (180 bu/ac * $6.75/bu)	1,215	298	917
a Annual cost items except Land and Management are rice production costs averaged across 2024 University of Arkansas rice crop enterprise budgets.
b The land charge is calculated as the average value for irrigated cropland in Eastern Arkansas reported in ASFMRA (2024) ($5,963/acre) multiplied by the rent-to-value ratio for irrigated cropland obtained from USDA NASS Arkansas (2024) ($152/acre cash rent divided by $4,200/acre for irrigated cropland).
c The management charge is calculated as rice gross return multiplied by the mid-range of charges for professional farm managers (5 to 10%) reported in NCFMEC (2011).

References and Resources

ASFMRA (2024). 2024 Mid-South Land Values and Lease Trends Report. American Society of Farm Managers and Rural Appraisers, Mid-South Chapter. https://nationalaglawcenter.org/wp-content/uploads//assets/Conferences/2024-Mid-South-ASFMRA-Land-Values-and-Lease-Trends-Report.pdf

NCFMEC (2011). Crop Share Rental Agreements for Your Farm. North Central Farm Management Extension Committee. NCFMEC-02. https://aglease101.org/wp-content/uploads/2020/10/NCFMEC-01.pdf

USDA-NASS Arkansas (2024). United States Department of Agriculture, National Agricultural Statistics Service, Arkansas Field Office. https://www.nass.usda.gov/Statistics_by_State/Arkansas/index.php

UTIA (2013). Crop-Share Leases. The University of Tennessee Institute of Agriculture. UT Extension PB 1816-E. https://utia.tennessee.edu/publications/wp-content/uploads/sites/269/2023/10/PB1816-C.pdf

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Watkins, Brad. “Calculating Equitable Crop Share Leases for Rice in the Mid-South.” Southern Ag Today 5(7.1). February 10, 2025. Permalink

Irrigation water is a significant resource for row crop agriculture in the Mid-South (Eastern Arkansas, Northeastern Louisiana, Northwestern Mississippi, and Southeastern Missouri). The primary crops grown in the region are rice, soybeans, cotton, and corn. All rice acres and most soybean, corn, and cotton acres in the region are irrigated. The region’s primary irrigation source is groundwater pumped from the Mississippi River Valley alluvial aquifer (MRVAA) (Massey et al., 2017). Pumping costs vary greatly throughout the region depending on the crop grown, the mode of power used to pump the water, and the pumping depth of water. This article looks more closely at the range of pumping costs for the Mid-South.

Table 1 presents the estimated costs per acre of pumping irrigation water for the four major crops grown in the Mid-South by energy source (diesel, electric) and by total dynamic head (TDH) (depth to water plus drawdown and discharge pressure). Crop irrigation amounts (acre-inches) represent average amounts reported for each crop in enterprise budgets from both the University of Arkansas and Mississippi State University. A diesel price of $3.54/gallon is used to calculate diesel pumping costs, while an electric price of $0.138/kWh is used to calculate electric pumping costs. The amount of diesel and electric energy used to pump irrigation water for a given TDH is based on irrigation energy consumption data for alluvial wells from McDougal (2015). 

Diesel power is currently more expensive than electric power. Farmers in the region have switched many of their diesel irrigation motors to electric motors because of the lower cost of electricity, but diesel is still prevalent due to the expense of running electricity to fields located far from electric utility lines. The proportion of diesel to electric pumps can vary greatly by farm in the region.

Pumping costs can vary greatly depending on geographic location and groundwater availability. To demonstrate this, Figures 1 and 2 present estimated average pumping costs per acre for rice and soybeans by county in Eastern Arkansas. Estimated average pumping costs in these figures assume half diesel and half electric power and are calculated using depth-to-water data from the Arkansas Groundwater Protection and Management Report for 2023 (Arkansas Department of Agriculture, NRD, 2024). Average depth-to-water values for each county are adjusted upward to TDH by adding 28 feet to account for drawdown and discharge pressure (Chris Henry, University of Arkansas Water Management Engineer, personal communication). Counties with a darker shade of red in both figures have the highest average pumping costs. Groundwater is more limiting for these counties relative to counties where water is more plentiful (counties with a lighter shade of red). Less groundwater translates into deeper pumping depths, making irrigation water more expensive in locations where water is more limiting.

References and Resources

Arkansas Department of Agriculture, Natural Resources Division (2024). Arkansas Groundwater Protection and Management Report 2023. https://www.agriculture.arkansas.gov/wp-content/uploads/2023-Groundwater-Report-Final.pdf

McDougall, W. M. (2015). A Pump Monitoring Approach to Irrigation Pumping Plant Performance Testing. Graduate Theses and Dissertations Retrieved from https://scholarworks.uark.edu/etd/1146

Massey, J.H., C.M. Stiles, J.W. Epting, R.S. Powers, D.B. Kelley, T.H. Bowling, C.L. Janes, and D.A. Pennington (2017). Long-Term Measurements of Agronomic Crop Irrigation Made in the Mississippi Delta Portion of the Lower Mississippi River Valley. Irrigation Science. 35:297-313. 

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Watkins, Brad. “Irrigation Water Pumping Costs in the Mid-South.” Southern Ag Today 4(36.3). September 4, 2024. Permalink

The Mid-South region of the United States (Eastern Arkansas, Northeastern Louisiana, Northwestern Mississippi, and Southeastern Missouri) is a highly productive and extremely homogeneous agricultural region. The region produces the same crops (corn, cotton, rice, and soybeans), uses relatively the same types of agricultural management practices, and is highly dependent on groundwater for irrigation from the Mississippi River Valley alluvial aquifer (Massey et al., 2017). Producers in the Mid-South also depend heavily on access to rented cropland. Purchasing enough cropland to be economically viable would require a significantly large capital investment. In addition, the market for cropland is thin and only a small fraction of cropland changes hands annually (Bigelow et al., 2016). Renting cropland provides crop producers with the flexibility to adjust their farm size as conditions warrant to achieve the scale of operation needed to remain economically competitive. Renting cropland also helps young crop producers with limited capital get started in farming.

Just how important is rented cropland in the Mid-South? Figure 1 presents harvested cropland in the Mid-South by tenure of the operator (full owners, part owners, full tenants) for the five agriculture census years 2002 through 2022 (USDA, NASS, 2024). Full owners operate only on land they own, while full tenants operate only on land rented from others. Part owners operate both land they own and land they rent from others. Hence, harvested cropland for part owners in Figure 1 is split between owned and rented cropland for each census year. The numbers in Figure 1 demonstrate the magnitude of importance that rented cropland plays in Mid-South agriculture. Significantly more cropland in the Mid-South is rented rather than owned, and dependence on rented cropland in the region has grown over time. Rented cropland by part owners in the Mid-South trended upward across the five census years, ranging from 4.1 million acres in 2002 to 5.1 million acres in 2022. A significant number of acres in the region are operated by full tenants, ranging from 3.6 million acres in 2022 to 4.4 million acres in 2012. In contrast, cropland operated by full owners trended downward for the region from 2.2 million acres in 2002 to 0.8 million acres in 2017 and 2022, while owned cropland operated by part owners remained relatively steady in the region at around 2 million acres each census year.

Figure 2 presents the percentage of harvested cropland operated by each tenure classification across census years for the Mid-South. For comparison, the same percentages are presented for the United States in Figure 3. Rented cropland plays a stronger role in Mid-South agriculture than the United States as a whole. Adding the percentage of cropland operated by full tenants to the percentage of cropland rented by part owners reveals that the proportion of total cropland rented in the Mid-South has ranged from 65 to 76 percent of total cropland. In other words, two-thirds to three-quarters of all cropland acres in the Mid-South have been rented from others since the beginning of the 2000s. This compares with approximately one-half (46 to 50 percent) of cropland rented from others in the United States over the same period. The larger proportion of rented relative to owned cropland in the Mid-South is due largely to full tenants. Full tenant percentages for the Mid-South are 2.5 to 3 times greater than those for the United States in all five census years. The full tenant category is typically defined as being largely comprised of young producers with limited capital. However, the large full tenant percentages for the Mid-South reflect limited access to cropland for purchase within the region rather than a large prevalence of young producers.

So why is the practice of renting cropland so prevalent in Mid-South agriculture? The simple answer is that most Mid-South cropland is owned by entities or individuals who are not farmers. These non-operator landlords are landowners who are not actively involved with a farm operation but rent their land out to other farm operators (Bigelow et al., 2016). The largest portion of these non-operator landlords are individuals, followed by partnerships. A large portion of these entities are retired farmers who rely on lease payments to support them in their retirement. Trusts and corporations represent other types of non-operator landlords (Bigelow et al. 2016). Non-operator landlord entities tend to hold on to the land rather than sell it to retain their investment in the land. They often seek others to farm the land to maintain its productivity and to receive a return on investment in the land.

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References and Resources

Bigelow, D. A. Borchers, and T. Hubbs (2016). U.S. Farmland Ownership, Tenure, and Transfer. United States Department of Agriculture, Economic Research Service, Economic Information Bulletin Number 161. August 2016. https://www.ers.usda.gov/webdocs/publications/74672/eib-161.pdf?v=7044.6

Massey, J.H., C.M. Stiles, J.W. Epting, R.S. Powers, D.B. Kelley, T.H. Bowling, C.L. Janes, and D.A. Pennington (2017). Long-Term Measurements of Agronomic Crop Irrigation Made in the Mississippi Delta Portion of the Lower Mississippi River Valley. Irrigation Science. 35:297-313. 

USDA, NASS, (2024). United States Department of Agriculture, National Agricultural Statistics Service, Census of Agriculture. https://www.nass.usda.gov/AgCensus/index.php

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Watkins, Brad. “The Importance of Rented Cropland to Mid-South Agriculture.” Southern Ag Today 4(18.3). May 1, 2024. Permalink

The Mid-South region (eastern Arkansas, northeast Louisiana, Mississippi, and southeast Missouri) experienced a significant expansion in irrigated soybean acres since the beginning of the 1980s (Watkins, 2023). Irrigated agriculture in this region is highly dependent on groundwater from the Mississippi River Valley alluvial aquifer. Eastern Arkansas is the largest soybean producer in the Mid-South. From Census year 1982 to Census year 2017, Arkansas irrigated soybean area expanded by +2.108 million acres (USDA, NASS, 2023a). Every county in eastern Arkansas experienced an increase in irrigated soybean acres during this time, but counties experiencing the greatest expansion were those bordering the Mississippi River. Are irrigated soybean acres still expanding or are they beginning to level off in eastern Arkansas? Will irrigated soybean area expansion continue across the region?

Area trend analysis was conducted to answer these questions. Irrigated soybean harvested acres data were collected for all 26 counties in eastern Arkansas for the period 1980 – 2018 from the USDA, National Agricultural Statistics Service (USDA, NASS, 2023b). Missing observations in the NASS data and additional acre observations for the period 2019 – 2023 were obtained from the USDA Farm Service Agency (USDA, FSA, 2023). 

Figure 1 presents irrigated soybean acreage trends for the 1980 – 2023 period. Three basic patterns of acreage trends are identified:

• Reached Plateau:

Counties shaded orange represent counties that achieved a plateau at some point during 1980 – 2023 period. Irrigated soybean acres for these counties increased and then leveled off during the 44-year period. 

• Declining:

Counties shaded red represent counties where irrigated soybean acres initially increased until an acre maximum was reached. After the acre maximum was reached, irrigated soybean acres began to decline. 

• Growing:

Finally, counties shaded either light blue or dark blue represent counties where acres continue to grow and do not appear to have reached a plateau. The counties shaded light blue are counties with acres growing at a constant rate over time. The constant rate of growth ranged from +0.65 acres per year (Drew County) to +3.79 acres per year (Phillips County). The dark blue counties (Chicot and Mississippi) represent counties where the rate of growth is not constant but expanding over time, with the most recent rate of growth reaching +5.26 acres per year for Chicot County and +7.23 acres per year for Mississippi County.

What information can be gleaned from these trends? Irrigated soybean acres in counties shaded red or orange are either declining (the red counties) or leveling off (the orange counties), implying irrigated area expansion in these counties has likely ended. Most of these counties are located in Critical Groundwater Areas where groundwater is being depleted faster than the rate of recharge (Arkansas Department of Agriculture, NRD, 2023). In addition, many of these counties have converted nearly all available non-irrigated soybean acres to irrigated acres. Counties shaded either light blue or dark blue are still expanding in soybean irrigated area. Most of these counties are located either alongside or within close proximity to the Mississippi River, where groundwater is more plentiful. Also, most of these counties still have a considerable amount of non-irrigated soybean area left for future irrigation conversion. These results highlight the importance of both groundwater availability and land availability to continued future sustainability of soybean production in eastern Arkansas and by implication the Mid-South region.    

References and Resources

Arkansas Department of Agriculture, Natural Resources Division (2023). 2022 Arkansas Groundwater Protection and Management Report. https://www.agriculture.arkansas.gov/natural-resources/divisions/water-management/groundwater-protection-and-management-program/

USDA-FSA (2023). United States Department of Agriculture, Farm Service Agency, Crop Acreage Data. https://www.fsa.usda.gov/news-room/efoia/electronic-reading-room/frequently-requested-information/crop-acreage-data/index

USDA-NASS (2023a). United States Department of Agriculture, National Agricultural Statistics Service, Census of Agriculture. https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Census_by_State/Arkansas/index.php

USDA-NASS (2023b). United States Department of Agriculture, Quick-Stats. https://quickstats.nass.usda.gov/

Watkins, B. (2023). The Rise of Irrigated Soybeans in Arkansas. Southern Ag Today 3(32.3). August 9, 2023. Southern Ag Today

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Watkins, Brad. “Will Irrigated Soybean Area Continue to Expand in Eastern Arkansas?” Southern Ag Today 3(49.3). December 6, 2023. Permalink

Arkansas has experienced a significant expansion in irrigated cropland since the beginning of the 1980s. From Census year 1982 to Census year 2017, irrigated harvested cropland acres grew from 2.022 million acres to 4.848 million acres, respectively, representing an increase of +2.826 million acres (USDA, NASS, 2023a). The majority of this increase in irrigated cropland acres (approximately 75% of the increase) was due to the expansion of irrigated soybean area. 

Figure 1 presents Arkansas soybean harvested acres split into all acres, non-irrigated acres, and irrigated acres for the years 1979 – 2018. All soybean harvested acres (non-irrigated + irrigated) dropped from a record level of 5.15 million acres in 1979 to 3.20 million acres in 1988 and thereafter remained relatively level for the state at 3.21 million acres. Non-irrigated acres dropped steeply from 4.80 million acres in 1979 to 0.51 million acres in 2018, while irrigated acres expanded from 0.35 million acres in 1979 to 2.71 million acres in 2018. It is obvious that most expansion in irrigated soybean acres was the result of converting non-irrigated acres to irrigated acres. Every county in eastern Arkansas experienced an increase in irrigated soybean area during this time, but counties experiencing the greatest expansion were those bordering the Mississippi River, where ample water from lateral river recharge of the underground aquifer allowed for greater transition of non-irrigated area to irrigated area (Gautam and Watkins, 2021). 

A major factor for the upward trend in irrigated soybean acres in Arkansas is the increased world demand for soybeans, particularly in China. Increased world demand for soybeans has increased the value of soybeans relative to other crops grown in the state, such as rice and cotton. However, a more fundamental and straightforward reason for expanded irrigated acres is more consistent yields under irrigation relative to non-irrigation. Figure 2 presents detrended soybean yields for Arkansas non-irrigated soybeans versus irrigated soybeans from 1979–2018. Yields have been detrended to remove the influence of technological advancement over time. Yields were 12.6 bushels per acre greater on average under irrigation compared to non-irrigation. Also, variation around the irrigated soybean mean, which represents yield variation due to weather, is considerably narrower relative to variation around the non-irrigated soybean mean. Thus irrigation makes soybean yields more stable relative to yields under non-irrigation. 

The phenomenon of expanded irrigated soybean area was not isolated to Arkansas alone. Other locations in the Mid-South also experienced significant irrigated soybean area expansion during the same timeframe. Changes in both irrigated acres and irrigated soybean acres from Census year 1982 to Census year 2017 are presented for locations in the Mid-South. All Mid-South locations in Table 1 receive most irrigation water from the Mississippi River Valley alluvial aquifer. Irrigated soybeans account for approximately 69% of increased irrigated area expansion in this region. Arkansas experienced the largest expansion in soybean area (75% of increased irrigated area) but all locations experienced significant expansion as well.

Preliminary evidence indicates that irrigated soybean acres may be leveling off in many parts of Arkansas, particularly in counties farther removed from the Mississippi River, where groundwater is more limiting. However, expansion in irrigated acres appears to continue in counties bordering the Mississippi River. A closer evaluation needs to be conducted to verify these preliminary findings.

Table 1. Change in Irrigated Acres and Irrigated Soybean Acres (Census Years 1982 to 2017) for Mid-South Locations.
Change Category	Arkansas	Mississippi	Northeast Louisiana	Southeast Missouri	Total Change
Change in Irrigated Acres	2,826,397	1,381,386	490,458	957,188	5,655,429
Change in Irrigated Soybean Acres	2,108,158	952,742	293,230	538,836	3,892,966
Irrigated Soybean Expansion (%)	74.6%	69.0%	59.8%	56.3%	68.8%
Source: Derived from USDA-NASS Census of Agriculture data.

References and Resources

Gautam, T.K. and K. B. Watkins. 2021. Irrigated Acreage Change and Groundwater Status in Eastern Arkansas. Journal of the American Society of Farm Managers and Rural Appraisers 2021. https://higherlogicdownload.s3.amazonaws.com/ASFMRA/aeb240ec-5d8f-447f-80ff-3c90f13db621/UploadedImages/Journal/2021Journal_ASFMRA_HR.pdf

USDA-NASS (2023a). United States Department of Agriculture, National Agricultural Statistics Service, Census of Agriculture. https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Census_by_State/Arkansas/index.php

USDA-NASS (2023b). United States Department of Agriculture, Quick-Stats. https://quickstats.nass.usda.gov/

Watkins, Brad. “The Rise of Irrigated Soybeans in Arkansas.” Southern Ag Today 3(32.3). August 9, 2023. Permalink