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Variable cash rental contracts are becoming increasingly popular
According to the Illinois Society of Professional Farm Managers and Rural Appraisers, variable leases are becoming increasingly popular.
Luke Worrell, chair of the organization’s Farmland Values and Lease Trends Committee, says the group’s mid-year survey shows that 35% of leases in the state are now variable cash arrangements.
“There are countless ways to construct them.” He says: “The vast majority of flexible leases have what is called a ground rent, which is guaranteed and paid regardless of price, yield or other factors. There is also some kind of bonus structure that is linked to actual agricultural production.”
He explains to Brownfield respondents that the arrangements worked well for both the farmer and the landowner.
“The growers who had cash rents for this season negotiated them in October or November 2023.” He says: “It looks very different today than it did then, and that’s why flexible leases try to replicate what actually happened.”
According to Worrell, the group expects the use of variable cash arrangements to continue to increase.
A full summary of the survey results can be found HERE.
AUDIO: Luke Worrell – Illinois Society of Professional Farm Managers and Rural Appraisers
