Category: Farm Management

Agricultural economists receive requests for a variety of data from our clientele. One common question we receive during this time of year is about the going rate on cash land rents. The U. S. Department of Agriculture National Agricultural Statistics Service (USDA NASS)  conducts an annual survey on cash land rental rates and publishes the results on its website by early August of each year.

Producers often rent a portion of the total land they farm. Part of this is because acquiring land is difficult due to scarcity, and the other part is because it takes significant capital to buy land. Farming on more acres by renting enables producers to more efficiently utilize their assets and achieve economies of scale through increased production while spreading their costs across more acres.

Producers can rent either irrigated or non-irrigated cropland. If the landowner has an established irrigation system in place, the rent on irrigated land is higher than the rent on non-irrigated land. In some instances, a producer can place temporary irrigation on the land they are renting. Since the producer owns and pays for the irrigation system, the rent expense is usually comparable to that of non-irrigated land. A variety of agreements can be made between the landowner and producer to accommodate their needs.

The following 2 figures show indices of average annual cash rents for the five years before and after the COVID-19 pandemic for irrigated (Figure 1) and non-irrigated (Figure 2) cropland. Land rents can vary significantly from parcel to parcel and state to state. An index was chosen instead of the actual value of cash rents per acre to allow for relative comparison between states. The year 2019 was chosen as the base year of the index because the rent values, published in August 2019, were not impacted by the pandemic. The scale of the y-axis on the irrigated and non-irrigated charts are the same with an index range from 70 to 140, although there is a much narrower range in observed non-irrigated land rents over the 11-year period from 2014 through 2024 than the observed range on irrigated.

Figure 1 shows a larger increase in average annual cash land rents on irrigated cropland during the 5-year period following the pandemic compared to the 5-years prior. South Carolina, Oklahoma, and Virginia saw a peak in average annual irrigated cash land rents in 2022, while North Carolina and Florida saw peaks in 2023. In 2024, these five states saw land rents come down slightly or stay about the same as their peak rates. The other states (Texas, Arkansas, Mississippi, Georgia, Alabama, and Louisiana) have seen rental rates continue to increase through 2024. Only Kentucky saw land rents below the 2019 average annual rate, except during 2023, when it was the same.

Figure 2 also shows a larger increase in average annual cash land rents on non-irrigated cropland during the 5-year period following the pandemic. However, the rate of increase is smaller than that of irrigated cropland. Alabama, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee, and Texas saw their highest average annual cash land rents on non-irrigated cropland in 2024. South Carolina and Virginia saw a peak in 2023 and a slight decline in 2024. Florida saw a peak in 2020, with rents on non-irrigated cropland below the rate in 2019 for the other years after the pandemic. The only state to see land rents on non-irrigated cropland peak prior to the pandemic was Arkansas in 2015.

Figure 1. Index of Average Annual Cash Rents, Irrigated Cropland in the Southeastern U.S. (2019 = 100).

Figure 2. Index of Average Annual Cash Rents, Non-irrigated Cropland in the Southeastern U.S. (2019 = 100).

Land rental agreements between landowners and producers will vary. There are fixed cash rent agreements where an agreed upon annual rate is paid by the producer to the landowner. There are flexible cash rent agreements where some of the burden of risk is taken upon by the landowner if production costs and revenues fluctuate. In a flexible cash rent agreement, the annual rate can differ from year to year, depending upon the state of the local farm economy. There are also share agreements that exist where a portion of the production from the rented land is shared between the landowner and producer. Landowners and producers should work to find the ideal agreement that is best for both parties.

References: 

U.S. Department of Agriculture (USDA) National Agricultural Statistics Service, Cash Rents Survey, August 2024. https://quickstats.nass.usda.gov/results/E0F5EB36-3313-3D7B-9E7F-E56A3365CF2B#9A9F55D7-E267-38C6-ACB9-DF106291B5A7

---

Smith, Amanda. “Cropland Rents.” Southern Ag Today 5(16.1). April 14, 2025. Permalink

Often, when speaking to groups of young farmers looking to return to the family farm, the first question I am asked is, “What is the best way to start a farm transfer?”  In most circumstances, I typically recommend a trial period for both generations. Instead of jumping into a farm business partnership, the junior generation (future owners) and the senior generation (current owners) must agree on how they will work together and how rapidly the farm transfer process will progress. This is something I refer to as a “pre-agreement.”

A pre-agreement should contain at least three parts: how to work together, how to develop the junior generation’s skills, and how long a trial period is necessary. Keep this agreement simple; it is not a legal agreement but a precursor to one. Treat this like an internship opportunity, where both sides must work together to improve the skills and employability of the junior generation and benefit the business for both generations.

How to Work Together

Get both generations’ expectations out on the table. It is better to air one’s concerns ahead of time than have difficult situations result. These “working together” guidelines should include basic things such as pay, time off, and when people are expected to show up and leave work. It is also wise to discuss how much autonomy or decision-making authority each person will have: will decisions be shared, or will the owner be the sole decision-maker?  Also, both parties need to be realistic about working together, even discussing how to part ways amicably if things don’t work out during this pre-agreement process. 

How to Develop the Next Generation

The next generation rarely has all the necessary skills and management ability to run the farm immediately. It is also just as rare that the senior generation will have all the necessary skills to be excellent trainers and teachers. The solution is to craft a development program that assesses the skills the junior generation needs and places the training responsibility on the senior generation. If training the next generation is too tricky, don’t be afraid to look to outside sources for farm manager training, such as college degrees, cooperative extension programs, trade schools and associates degrees, and Farm Bureau young farmer and rancher meetings.

How Long of a Trial Period

The junior and senior generations must agree on how long this pre-agreement trial period will last. At the end of the trial period, plan to make a decision: continue farming together; modify the working relationship and progress the farm transfer process; or part ways in a friendly manner. Both parties must always be open to voicing and hearing concerns.  For longer agreement periods, it’s a good idea to schedule routine checkpoints (at least annual, if not more frequent) to discuss how each generation is living up to their side of the bargain.

A Sample Pre-Agreement

A sample is provided here as an example of the types of things a pre-agreement could address.  Feel free to modify this sample to fit your farm’s circumstances.  If additional materials are needed, please talk to your local extension agent.  You may also find general business transfer guides at https://coopcenterSC.org. 

---

Richards, Steven. “Before Starting a Farm Transfer: A Farm Family Pre-Agreement.” Southern Ag Today 5(15.1). April 7, 2025. Permalink

Agriculture is a multi-generational industry, and it is a source of pride for many people in the sector. However, it is also a challenge we must navigate as we move our businesses from one generation to another. There are several hurdles to transitioning a farm business to the next generation, including legal, financial, and social. Initially, we often turn to lawyers and accountants with our questions. However, perhaps the first and most challenging obstacle is the communication needed to bring our families together for these major decisions. 

Research in the area of transition planning suggests that there are four stages to go through: (1) development of a retirement plan, (2) identifying a successor, either family or non-family, (3) transferring managerial control, and (4) legal transfer (lawyer and accountant). Many farm transition planning workshops host a lawyer and/or accountant to answer questions and help farm families, but it may be interesting to know that this is the last step in the complete process and that we tend to get stuck on the first step more often than not. 

The legal barriers to transitioning a farm require expert help and will vary by farm business, as will the tax implications for different asset bases and in different states. The financial barriers can either speed up or slow down transition plans as the available funds may affect the viability of bringing another person or family into the business. The social barriers will also vary and can include things like delaying a transition decision while waiting for a child to make career and/or marital choices. Marriages and divorces can complicate transition planning as well. Finally, it can be very hard for a farmer or rancher to give up their identity as a producer and control of business decisions by handing over the keys to another, even when it is the next generation of their family. The social barriers arise because farms are a unique intersection between families and businesses.

In conducting qualitative research in Alabama, we have talked to many farmers between the ages of 35 and 50 about their management styles and the issues that challenge them in their operations and lives. We are learning that transition planning is at the top of their minds but approaching the older generations who still own and/or control farm assets is not always easy. They don’t know how to start the conversation in a respectful way that keeps the line of communication open. It may be that encouraging them to attend a transition planning session put on by Extension or at a commodity meeting is one way to start the conversation. Another is asking a family friend to breach the topic, reminding them that time can slip away from them if this gets put off indefinitely. Maybe the first step is as simple as forwarding a copy of this article and asking them to share a conversation over a cup of coffee. Whatever your approach, it is a worthwhile thing to consider and discuss.

---

Taylor, Mykel, and Kelli Russell. “Talking about Transitioning our Farms and Ranches.” Southern Ag Today 5(14.1). March 31, 2025. Permalink

Timely planting is crucial for crop insurance coverage, ensuring producers remain eligible for their selected yield or revenue guarantee. Producers should monitor three key crop insurance planting dates: Earliest Planting Date, Final Planting Date, and End of Late Planting Period Date. These dates determine coverage eligibility and can impact insurance claims. While crop insurance planting dates typically remain consistent from year to year, they may occasionally be reviewed and adjusted by the U.S. Department of Agriculture – Risk Management Agency when necessary. Any changes to these crop insurance planting dates involve a thorough process, including stakeholder input and consultation with Extension specialists and experts.

Earliest Planting Date is the earliest date producers may plant an insured agricultural commodity (e.g., rice, corn, soybeans, and peanuts) and qualify for a replanting payment if the crop is damaged by an insurable cause of loss and such payment is available for the crop. However, cotton does not have a designated Earliest Planting Date. Since cotton planting depends on soil moisture and temperature, which vary annually, a fixed Earliest Planting Date is impractical. Additionally, because the cotton crop insurance program does not include replant payment coverage, an Earliest Planting Date is unnecessary for determining replant eligibility.

Final Planting Date is the deadline by which acres must be planted to receive the full production guarantee selected by the producer. Acres planted after this date will have a reduced guarantee for crop insurance products with a Late Planting Period. Any unplanted acres as of this date must be reported to the insurance agent within three days. 

Late Planting Period for cotton crop insurance begins the day after the Final Planting Date and lasts for 5, 7, 10, or 15 days, depending on the location. Late Planting Period ends on the End of Late Planting Period Date. This period applies only to cotton crop insurance products that include a Late Planting Period. The specific length of the late planting period varies by location:

• 15 days: Counties in Arizona, Arkansas, California, Kansas, Louisiana, Missouri, and Tennessee.
• 10 days: Counties in Alabama, Georgia, and South Carolina.
• 7 days: Counties in New Mexico, Oklahoma, and Texas.
• 5 days: Counties in North Carolina and Virginia.
• For Florida, only Nassau County has a 10-day late planting period, while all other counties have 15 days.
• For Mississippi, 10 counties in the southern part of the state have a 10-day late planting period, while the rest of the counties have 15 days.

For acreage planted during the Late Planting Period, the crop insurance guarantee decreases by 1% for each day after the Final Planting Date until the End of Late Planting Period Date, while the producer’s insurance premium remains unchanged. Acres planted after the End of Late Planting Period Date are generally uninsurable, except in cases where prevented planting coverage applies.

Our previous article in Southern Ag Today provided a detailed overview of all crop insurance products available to cotton producers. Cotton insured under Yield Protection (YP) or Revenue Protection (RP) plans, with related Supplemental Coverage Option (SCO), Enhanced Coverage Option (ECO), and Hurricane Insurance Protection – Wind Index (HIP-WI) options and endorsements, all follow the same Final Planting Dates, Late Planting Periods, and End of Late Planting Period Dates. The Final Planting Dates for these plans are illustrated in Figure 1.

Cotton insured under Area Risk Protection Insurance (ARPI) and Stacked Income Protection (STAX) does not have a Late Planting Period, thus no End of Late Planting Period Date. Additionally, even though ARPI and STAX policies have the Final Planting Dates, they differ from those of other crop insurance plans. This distinction exists because STAX and ARPI are area-based plans, where coverage and indemnities are determined by county-wide expected and final yields/revenue rather than individual producer’s farm yields or revenue. Since a producer’s specific planting date has a minimal impact on county-wide yield/revenue risk, late planting does not lead to a reduction in coverage under these plans. As a result, the Final Plant Dates for STAX and ARPI align with the End of Late Planting Period Date used for other crop insurance plans.

If planting by these deadlines is not possible, farmers should keep detailed records documenting the cause. If farmers anticipate being unable to complete planting by the Final Planting Date or during the Late Planting Period, they should contact their crop insurance agent as soon as possible to discuss their options.

Figure 1. Regional Variations in Final Planting Dates for Cotton Crop Insurance: YP, RP, SCO, ECO, and HIP-WI Policies

Reference: 

Chong, Fayu, Yangxuan Liu, and Hunter Biram. “Exploring Diverse Crop Insurance Options for Cotton Producers.” Southern Ag Today 3(51.3). December 20, 2023. 

---

Yangxaun, Liu, Hunter Biram, and Faygu Chong. “Cotton Crop Insurance: Navigating Planting Dates Deadline Variations Across Regions.” Southern Ag Today 5(13.1). March 24, 2025. Permalink

Introduction

When producers need to borrow money, they have several options, including commercial banks, insurance companies, and machinery/equipment financing companies. The Farm Credit System (FCS) has historically been one of the largest agricultural lenders in terms of loan volume, representing 40% of farm production loans and 49% of farmland real estate loans. 

FCS distinguishes itself from other types of lenders by providing more flexible loan terms that align with seasonal cash flows and the expertise of loan officers who possess deep knowledge of local agricultural markets. One of the largest differences is their patronage refund system, which effectively reduces borrowing costs for its members.

Patronage Distribution of FCS and Recent Trends

As cooperatives, FCS associations distribute a portion of their earnings back to their members through patronage dividends. Producers who borrowed money from the FCS receive a portion of the lender’s profits back through patronage distribution. This can take the form of cash payments, allocated equity, or a combination of both. 

For example, suppose you take out a loan with an 8.5% interest rate from a local FCS association. At a designated time of the year, your lender distributes patronage, and you receive a 1% refund. Your effective interest rate is now 7.5%, after factoring in the refund. This process effectively lowers borrowing costs, strengthens member relationships, and reinforces the cooperative model by ensuring that profits benefit the borrowers who generate them.

In recent years, several FCS associations have significantly increased their patronage distributions mostly driven by increased loan volume, setting new records for returning earnings to members. For instance, Farm Credit East announced a record $140 million patronage distribution for 2024, effectively reducing borrowers’ interest rates by 1.25%. Similarly, Farm Credit Mid-America plans to return $260 million in 2025, marking the largest distribution in its history and bringing its total patronage returned since 2016 to over $1.5 billion. Other associations, such as AgTrust Farm Credit and Farm Credit Services of America, have also expanded their patronage programs, ensuring that a greater portion of earnings is reinvested into the agricultural economy through member returns.

The Impact of Patronage on Agricultural Borrowers

While patronage distribution is a significant benefit, they are not guaranteed, and other loan terms beyond patronage should be considered when evaluating loan options. However, the patronage distribution of local FCS associations should not be overlooked. By reducing effective interest rates, these distributions ease financial burdens on farmers and agribusinesses, allowing them to reinvest savings into operations, expansion, and innovation.

Additionally, strong patronage programs reinforce borrower loyalty and trust in the cooperative model, distinguishing FCS institutions from traditional lenders. As patronage remains a key component of the FCS structure, its continued growth will play a vital role in supporting American agriculture in an increasingly competitive economic landscape.

---

Gladney, Heather, and Kevin Kim. “Understanding Patronage Distribution of Farm Credit System Association.” Southern Ag Today 5(12.1). March 17, 2025. Permalink