Category: Farm Management

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

Over the last few years, producers have been challenged to balance decreasing commodity prices against high input costs. One of the major factors contributing to this challenge has been above-average fertilizer prices. In 2021 and 2022, a combination of increased demand for fertilizer and disruptions to fertilizer production and supply caused prices to double or, in the case of anhydrous ammonia (NH3), triple in a few months (Figure 1), reaching record highs. The good news is that nominal fertilizer prices decreased throughout 2023 and 2024 as these shocks were largely corrected. In the first half of 2023, prices decreased by 20%-40%, depending on the product, from their 2022 highs. Prices largely declined in 2024 until the last quarter of the year. Since then, prices for most fertilizer products have either remained stable or increased.

Of course, the cost of fertilizer depends not only on the price of fertilizer but also on the price of the commodity the fertilizer is used to grow. It’s much easier for producers to purchase fertilizer when they can sell corn for $7/bushel, as opposed to $4/bushel, regardless of the nominal fertilizer price. Figures 2 and 3 illustrate the price of urea relative to corn and cotton prices for the years 2020-2024. Fertilizer prices used to calculate these ratios come from DTN Progressive Farmer’s weekly average fertilizer price updates. Cotton and corn prices use the weekly closing price for the nearby December contract as reported in Texas A&M AgriLife Extension Economics Basis Data and by Barchart.com.  

Figure 2 illustrates the total bushels of corn required to purchase one ton of urea in each month of the series. Figure 3 shows the total pounds of cotton lint required to purchase one ton of urea each month. From January 2020 until August 2021, producers needed an average of 98.02 bushels of corn or 577.80 pounds of cotton lint to purchase 1 ton of urea. From September 2021 through December 2022, when fertilizer prices reached their highest levels, one ton of urea cost an average of 135.72 bushels of corn or 836.61 pounds of cotton lint. From January 2023 through December 2024, as fertilizer prices fell, one ton of urea was worth 117.40 bushels of corn or 719.26 pounds of cotton lint on average.  

Now, what about relative fertilizer prices in 2025? For the week of January 13-17, DTN Progressive Farmer reported an average price of $492/ton of urea. During that same week, the average price for the Dec ’25 corn contract was $4.56/bushel, and the average price for the Dec ’25 cotton contract was $0.69/pound, according to Barchart.com. This gives us a urea-corn price ratio of 107.92 bushels/ton and a urea-cotton ratio of 711.25 pounds/ton. To put these values into perspective, this urea-corn ratio is similar to the June 2020 ratio and about 0.83 bushels/ton less than in January 2024.  The urea-cotton ratio, on the other hand, is about 52.32 pounds/ton higher than in January 2024, and similar to June and July of last year.  

Currently, fertilizer is slightly cheaper relative to corn prices and slightly more expensive relative to cotton prices when compared to a year ago.  Looking forward, nominal fertilizer prices have been mostly stable since July of last year.  Should this trend continue, changes in relative fertilizer prices this year will depend on how farm commodity prices change. 

Figure 1.  Weekly Retail Prices for Selected Fertilizer Products, 2020-2024

Figure 2. Monthly Urea-Corn Price Ratio, 2020-2024

Figure 3. Monthly Urea-Cotton Price Ratio, 2020-2024

Sources:

Corn Historical Prices.  Barchart.com, https://www.barchart.com/futures/quotes/ZCZ25/historical-prices?orderBy=contractExpirationDate&orderDir=asc. 

Cotton #2 Historical Prices. Barchart.com, https://www.barchart.com/futures/quotes/CTZ25/historical-prices?orderBy=contractExpirationDate&orderDir=asc. 

DTN Retail Fertilizer Trends.  DTN Progressive Farmer, https://www.dtnpf.com/agriculture/web/ag/crops. 

Texas A&M AgriLife Extension Agricultural Economics Basis Data, https://agecoext.tamu.edu/resources/basis-project/basis-data. 

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Wright, Andrew. “Fertilizer Prices: What Can We Expect in 2025?” Southern Ag Today 5(6.1). February 3, 2025. Permalink

It is the heart of the winter in the southeastern broiler belt. January and February are typically the coldest, but March often comes in like a lion, bringing plenty of cold with it, too. Commercial poultry growers have embraced the risk management strategy of pre-buying or contract “booking” propane ahead to secure the lowest prices possible each year. But by the end of the season, it is not unheard of for growers to run out of pre-purchased or contracted allotments and be left subject to late-season cash market price fluctuations or potentially purchasing additional contract allotments at increased prices. This can leave growers wondering which option is best to end the season. There are several things to consider.

U.S. propane prices are certainly affected by local markets, but the wholesale component for those prices is still impacted by international supply and demand pressure on crude oil. It seems the current world economy is slowing, especially the Chinese economy, potentially signaling a decreased demand for oil. Less oil production usually means less propane production/supply, supporting a higher price. This could be somewhat offset by increased war demands on petroleum production. Locally, Gulf Coast propane supplies are hovering at the top of the five-year average (Fig. 1). However, wholesale prices are about 20% higher than at the same time last year (Fig 2). Gulf Coast propane production has been steady while overall demand for LP is down currently compared to last year (Fig 3), suggesting lower prices may be on the horizon. What does this mean for the commercial poultry grower reaching the end of his contract allotment? Local market dynamics will likely affect prices more than international supply and demand dynamics for the remainder of winter. If the weather forecast suggests a milder end to winter, it may be prudent to end the season on the cash market as needed, expecting local prices to decrease going into spring rather than signing a late-season contract. Then, wait for the summer booking to prepare for winter 2025-26. However, if a grower can contract additional LP booked for close to their previous contract price, it is usually a good risk management decision to do so. It’s up to the grower to decide when that difference warrants taking the risk. 

Natural gas users are typically tied to the current cash price for gas as it is delivered at the meter. Local (U.S.) supply and demand are the primary drivers of NG prices for U.S. consumers, which is greatly affected by weather. Although the South Atlantic region has thus far experienced 59 fewer Heating Degree Days than normal, 26 fewer than last year,temperatures are beginning to fall, leading to local NG prices increasing across the region and nationally. Current US-EIA data shows a 4.7% increase in NG prices for the southern region, with the Henry Hub wholesale price (southeastern source for NG) rising $0.37/MMBtu the week of January 13, 2025 (Fig 4).  All of this seems to indicate a rising price for commercial natural gas users for the remainder of this winter season. 

As always, it’s never too late to tighten up the leaks and shore up the insulation in the poultry houses. A little savings can go a long way in an increasing fuel price market. 

Fig. 1 – Gulf Coast region LP supply is near the high 5-year average (U.S EIA). 

Fig. 2 – Wholesale LP prices are approximately 20% higher than this time last year.

Fig. 3 – LP demand is down slightly compared to last year, suggesting lower prices may be on the horizon. 

Fig 4. – NG prices at the Henry Hub (southeastern source) are trending higher at the end of the season, mainly due to decreasing temperatures in the region. 

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Brothers, Dennis. “Short-term Heating Fuel Decisions Facing Commercial Poultry Growers.” Southern Ag Today 5(5.1). January 27, 2025. Permalink

Choosing the best variety of seed has always been important for producers, but in 2025 this decision will likely carry more weight. With the squeeze of lower commodity prices and higher input prices, variety selection that is best suited for each producer’s growing conditions is a factor that affects the bottom line. Time spent evaluating the numerous varietal choices this time of year will be worth the time and effort.

There are numerous sources to gather information about the varieties for an individual grower’s situation. It’s worth pointing out that there isn’t a “one size fits all” strategy to select the best variety. Utilizing more than one source is recommended but be cautious not to seek too many sources as this may add to the confusion.  Here are some resources that can be utilized in making a varietal selection.

The variety selection process should start and end with your knowledge and experience with your fields and growing conditions.  Good records help to provide valuable information and fill in some details that may be forgotten over the growing season. It’s important to try to match varieties to your fields. For example, low lying fields may have more fertile soil but could have wet areas, and fields on hillsides may not have the yield potential of other fields.

Other sources of information for variety selection are neighbors that have similar growing conditions, seed company representatives, and farm supply stores. Keep in mind that some of these resources may focus heavily on the products they represent or profit from and, therefore, could be biased in their recommendations. Developing productive relationships with all of these individuals can lead to better and more confident variety decisions.

The most important source of information is from the variety testing programs at land grant university systems. Most land grant university research and extension programs have variety testing trials that provide unbiased results. These variety tests are usually in strategic locations across the state to provide growing conditions that are similar to growers in the area. While not all growing conditions can be represented in official trials, they could provide valuable information. Check with your state’s land grant research/extension programs to find out about variety trial information in your area.

There are two kinds of trials that universities may be involved with, as seen in Figure 1 Variety Tests. 

Figure 1. Variety Tests*	Official Variety Trial (OVT) Small Plots	On-Farm
Conducted by:	OVT Program	Extension
Located	Research Stations	Grower Fields and Research Stations
Plot Size	Small	Large
# of Varieties	More (up to 50+)	Fewer (less than 15)
Types	Released & Experimental	Mostly Released
Replication	Always	Not always
Statistical Analysis	Always	Not always
Equipment	Research	Commercial

There are advantages and disadvantages to both the Official Variety Trial (OVT) Small Plots and On-Farm trials. The replication and statistical analysis, along with more experimental varieties, are advantages of the OVT Small Plots. The On-Farm plots are larger and managed on a scale closer to commercial production practices.  It’s also important to consider multiple years of results and not base the decision on one year’s performance. Also, look at as many details of the trial as possible. What were the fertility levels of the plot, and how much fertilizer was applied? What other pesticides were used and at what rate? What were the growing conditions? Were the climatic conditions stressful, if so, how did that affect yields?

In summary, variety selection is crucial as we are looking at an economically challenging growing season in 2025. Match the varieties to your growing conditions as best as possible. Time and effort spent now in selecting varieties for your farm is one of the best investments that a producer can make. 

Resources: 

*Figure 1. Adopted from OVT Small Plots vs On-Farm FAQ https://aaes.auburn.edu/variety-tests/ovt-frequently-asked-questions/

Auburn University Official Variety Testing – https://aaes.auburn.edu/variety-tests/

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Runge, Max. “Variety Selection Resources.“ Southern Ag Today 5(4.1). January 20, 2025. Permalink

Hurricane Helene struck six southern states, from Florida to Virginia, in late September 2024. It made landfall in Florida’s Big Bend region as a Category 4 hurricane, weakened to a Category 2 across Georgia, and became a tropical storm as it moved through South Carolina, North Carolina, Tennessee, and Virginia. Over 250 counties have been declared federal disaster areas eligible for individual and/or public assistance (see Figure 1). Many timber owners in and near these areas have suffered significant timber losses. The hurricane caused around $1.86 billion in timber losses across 1.5 million acres, including some of the Southeast’s most productive timberland. While full recovery will take years, timber owners can take some immediate steps to mitigate losses, such as claiming timber casualty losses on federal income tax returns and conducting salvage timber sales.

There are a few key points for deducting timber casualty losses resulting from a federally declared disaster like Hurricane Helene and deferring taxes on salvage timber sales:

• Timber casualty loss deduction. You may be able to claim a deduction for timber casualty losses on your federal income tax return. 
• Choice of tax year to claim the loss. If your damaged or destroyed timber was in a federally declared disaster area (see Figure 1), you can choose to claim the casualty loss on either your 2023 or 2024 tax return. 
• Method for determining loss. Timber casualty losses should generally be determined using the timber depletion block approach, rather than simply adding up the value of the damaged or destroyed timber. 
• Deduction limit. The deductible amount for timber casualty losses cannot exceed the adjusted basis of the affected timber depletion block. This amount is often lower than the retail value of the affected timber block.
• Salvage timber sales. Claiming a casualty loss deduction and conducting a salvage timber sale are separate events. You do not have to wait until you complete a savage sale to claim your timber casualty loss. 
• Tax deferral on gains from salvage sales. You can defer taxes on profits from salvage timber sales if you use the proceeds to purchase qualifying replacement property.

For more information, please refer to this publication.  Although the publication focuses on Georgia timber owners affected by Hurricane Helene, the general principles apply to timber losses caused by other casualty events, such as fires, floods, hurricanes, and storms. Please visit FEMA for the list of federally declared disasters related to Hurricane Helene in Florida (DR-4828-FL), North Carolina (DR-4827-NC), South Carolina (DR-4829-SC), Tennessee (DR-4832-TN), and Virginia (DR-4831-VA).  Be sure to consult your accountant and/or tax specialists.

Figure 1. Designated areas due to Hurricane Helene

Timber Stand Damage