4 Reasons Landowners Should Receive Yield Data

Farmland owners, do you recognize this image below? It’s a yield map, and it’s one of the most important communication tools your farmer can provide to help you understand your farm’s performance. If you aren’t receiving yield maps from your farmer today, you should start asking for them. Here are 4 big reasons why:

1. Use it to determine gross revenue.
When you have yield information, it is a simple calculation to determine the gross revenue generated by your farm (yield*price of crop/bu = gross revenue). This number is important in helping determine a fair market rent. If you need more information about the different approaches used to calculate this critically important number, read our article, “Calculating Cash Rent.”


2. Understand the nutrition management of your farm.
Yields can be used to help you understand the amounts of fertilizer and other nutrients your farmer is applying, so you can have productive and fact-based conversations if these amounts differ from general recommendations. With the yield, you can perform a mathematical calculation to determine which nutrients have been removed from a field and what amount of fertilizer and nutrients must be applied to maintain fertility. Every farmer will tell you that they treat the land like it is their own, but fertilizer is the second most expensive input behind seed. When money is tight, this is sometimes an area that doesn’t get the attention and resources it should. This practice is commonly referred to as mining the soil, and good farmers don’t do it—but yield maps can help you determine what’s happening on your particular farm. Tracking soil management activities documents that your farmer is taking care of the land. (To see how this works, try this calculator from Ag PHD.)


3. Just how good is your farmer?
Having an accurate yield history can help you determine whether you have an average farmer, a good farmer, or a great farmer. Historic average yields for every county are available through the USDA (see the sample below from DeKalb County, IL), and although yield will depend on the quality of your farm, you can compare the trendlinesa good farmer’s productivity and trendline should be better than average. As an aside, many landowners don’t realize that even if grain prices are stable, yields are going up over time (yields have increased 170% since 1950), meaning that the revenue generated by your farm is also going up.

4. Increase the value of your farm.
If you ever choose to sell your farm, having yield or production records will likely increase the value of the farm. As is outlined in this Iowa state article about financing the purchase of a farm, potential yields influence both what a farmer and an investor are willing to pay for a farm. Your farm is an investment, and since yield directly impacts revenue, having strong yield data helps substantiate a higher price for a farm whether the potential buyer is a farmer or a landowner.


Collecting yield data and making these comparisons is just one thing that Tillable helps do for landowners to help ensure that your asset is being taken care of and performing to its potential. We can help you get started with a Free Farmland Checkup.

Tillable To Be An Exhibitor at the 2019 Land Investment Expo: January 25th

Tillable will be exhibiting at the 2019 Land Investment Expo on January 25th at the Iowa Events Center. You can register today at https://buff.ly/2FmOkomand come visit our booth! #LandExpo19 

Below is an excerpt from the Land Investment Expo’s website:


The 12th Annual Land Investment Expo will be held on Friday, January 25, 2019, and we’re pleased to announce Martha Stewart, founder of Martha Stewart Living Omnimedia, an Emmy Award-winning television show host, bestselling author of over 90 books and America’s most trusted lifestyle expert and teacher, as our keynote speaker.

Tickets are going fast following the announcement of Ms. Stewart as our 2019 keynote speaker. Register today to ensure your seat is secured at the marquee Land Investment Expo.

The first Land Investment Expo was held in 2008, attracting strong interest from land owners, farmers and financial and policy leaders mainly from Iowa and surrounding states. After several years of continued effort, planning and attention, the Expo has grown into one of the nation’s premier forums focused on the future of agriculture.

Today, the Land Investment Expo is recognized as a world-class conference with top-flight programming. The Expo annually attracts more than 900 attendees from around the world.

Major institutional investors, national agricultural organizations, economists, as well as political and academic leaders see the Expo as an important exchange on challenges and opportunities involving land investment, market forces and the growing impact of technology in land management. With presentations by some of the most recognizable names in the industry, these high-caliber speakers provide fresh, innovative, challenging content to attendees. Dialogue during multiple breakout sessions related to the farm economy, land values, and land investment strategies provide attendees with ideas and practices to improve not only investment performance but create lasting value.

To accommodate the growing interest in the Expo, we’ll be moving to a larger venue in 2019 – the Iowa Events Center. For more information, contact Becky Rozenboom at 855.800.5263 or Becky@PeoplesCompany.com.

This Week In Farmland Ownership – 8/07/18

Commodity market price drivers

“Just had a long and very good conversation with President Xi Jinping of China. We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!”

And the soybean market was off to the races, up 25 to 30¢, breaking through resistance on an upward move unseen for many months, settling in the $8.70 range.

  • What is your seed order for 2019? IL marketing specialist Todd Hubbs says, “The current price environment across principal crops points to constant or modest changes in total planted acreage in 2019 and holds the potential for less overall soybean and corn acres.”  He says the Renewable Fuels Standard pushed up corn acreage and Chinese imports pushed up soybean acreage, both at the expense of wheat.  “Corn and soybean acreage increased from 158.3 million acres in 2006 to 178.3 in 2018 with a peak acreage of 180.3 mil. in 2017.  Over the same period, wheat acreage declined from 57.3 mi. acres to 47.8 mil. projected in 2018.  The low for wheat acres came in 2017 at 46.02 mil.    Similarly, small grain acres fell from 18 mil. acres to 14.88 mil. with a low of 14.5 in 2017.”  But that is changing, driven by crop prices, he says.  “Narrowing profitability margins appear to be shifting away from the expansion of corn and soybean acreage and back to wheat, small grains, and cotton in many areas.  Current projections by industry analysts place 2019 corn acreage in a range from 90 to 93.7 mil. acres.  Soybean acreage projections come in between 82.3 and 87.5 mi. acres.  In essence, if the current margins continue, we may be at the beginning stages of unwinding the acreage shifts seen over the last decade.”  If farmers are cutting bean acres and boosting corn acres in 2019, what are the percentages?  Hubbs says, “Using current market prices, projections for corn and soybean acreage place 2019 corn acreage at 91.1 mil. acres and soybean acreage at 85.7 mil. acres.”
  • Marketing by tweet may not be the most reliable strategy, suggests Jerry Rowe, general manager of Heritage Grain at Dalton City, IL. “Markets last two days ran the beans on the tweet about how good the trade issues are going with China.  Remember there may or may not be any fact to the tweet.  It scares us old guys to see markets react like this to social media.  There was no fact to the tweet that you or I can hold on to. I do hope it is correct.  But I question the reasons for the tweet.  Any trade deal needs to come before too long.  If it drags out until February and March, the bulk of beans exports normally shift to South America in that time frame.  I hope we get a satisfactory conclusion and the sooner the better for the bean market.  Without it there will be a great surplus of beans going into next harvest.”
  • Part of the soybean surplus was shipped out a couple weeks ago. S. export inspections for soybeans topped trade expectations with 48 mil. bu. in the week ended Oct. 25, the biggest week since mid-February.
  • Are US soybeans entering China via Vietnam? A ship carrying U.S. soybeans changed destination from China to Vietnam on Saturday as exporters find new buyers for American supplies amid an escalating trade war.  Bulk carrier Audacity left Louis Dreyfus’ Pier 86 terminal in Seattle on Oct. 21 for Qingdao, China with 2.5 mil. bu. of soybeans, according to USDA inspection data. After six days, it changed course to Phu My, Vietnam. Louis Dreyfus didn’t immediately respond to a request seeking comment.  USDA data indicates Vietnam’s imports of U.S. soy have risen 93% this year.  Another shipload of 1.3 mil. bu. of soybeans from the Pacific Northwest ports also changed its course in the past week from Qingdao, China to Yeosu, South Korea.
  • USDA will be issuing its next WASDE report on Thursday, and the market will be watching closely for how the Office of the Chief Economist reconciles some conflicting data about Chinese soybean imports for the 2018-19 marketing year. The latest WASDE reports indicate China will be importing 94 mmt, or some 3.45 bil. bu. of beans.  However, the USDA’s agricultural attaché office in China issued its report indicating a 9 mmt drop in expected soybean imports, cutting the demand to 3.12 bil. bu.  The attaché report shows significant cuts, not only in imports, but also in soybean imports but in total consumption, crush, and distribution throughout the Chinese soybean meal pipeline.  That indicates China may be serious in looking at other sources of protein for livestock production.
  • The Chinese switch away from US soybeans would result in major changes in the flow of global grain trade, economists predicted last summer. And it is happening now, says USDA.  In the weekly transportation summary, USDA’s Agriculture Marketing Service reports, “The 2018/19 corn and soybean harvests are showing a reversal of transportation movements from the patterns of recent years. For the first time in seven years, corn exports overtook soybean exports during the first two months of the marketing year, marked by a steep drop in soybean exports to China. The shift in exports has changed the routing of some grain and oilseed movements to open additional storage and transportation capacity during this year’s harvest, which may temporarily help boost the competitiveness of U.S. corn exports this year. The movement of this year’s grain harvest has not yet fully materialized on the rail and barge networks. With record export corn sales during the last marketing year, weekly grain car loadings were above the prior 3-year, 4-week average from April to September. Similarly, weekly barge movements of grain trended near or above the 3-year average during the same period. However, beginning in October 2018, both rail car loadings and barge movements of grain have fallen well below their 3-year averages.  The October edition of USDA’s Oil Crops Outlook reported that changing export destinations for soybeans have caused initial export sales and shipments to be slower than usual and may shift a higher percentage of export sales into the second half of the 2018/19 marketing year. Given the pace of corn exports in recent months and the strong pace of recent sales and shipments, USDA’s Feed Outlook in October reported corn exports during 2018/19 are expected to be 2.475 bil. bu., which would exceed the previous year’s record of 2.438 bil. bu. The report also indicated the increase in the U.S. share of world corn exports is being helped by decreased Russian corn production, increased sales to Mexico, strong global demand, and record-high supplies.”

Farm Economy

  • Looking through a 10-year telescope, USDA economists believe the potential 92 mil. acres of corn expected in 2019 will stay that way through 2028. And a 10-year projection for soybean acreage will begin at the 82.5 mil. acre mark in 2019 and slowly rise over time.  Those estimates were included in USDA’s agriculture projections, which will be finalized in February and drive the USDA budgeting process. And those numbers for next year are not out of line with what private economists have been telling the market to expect.
  • On corn, USDA projects a 14.93 bil. bu. crop with a yield of 176.5 bu. per acre from 92.0 mil acres planted. It assumes 15.19 bil. bu. of total use, including a 50-mil. bu. uptick in corn use for ethanol; 60 mil. bu. increase in food, seed and industrial; and 50 mil. bu. decline in exports.  USDA sees ending stocks for 2019-20 dipping to 1.603 bil. bu. from 1.813 bil. this year. The average farm price is projected to increase 40 cents to $3.90 per bu.
  • For soybeans, USDA projects 82.5 mil. acres planted with a 50-bu. average yield and a total crop of 4.09 bil. bu. The crush is projected at 2.075 bil. bu., with the same amount exported with total use of 4.277 bil. USDA estimates domestic soybean ending stocks will decline from 885 mil. bu. in 2018-19 to 723 mil. in 2019-20.  USDA’s estimate for 2019-20 has an average farm price of $8.75 a bu.
  • The USDA projections are made for budgeting purposes, but the market relies very little on them since they could quickly change as the soybean market did with the tariff exchange. The more valuable numbers are the USDA’s projections for the 2019 growing season and 2019-20 marketing year. The more interesting number could be the trend yield estimate for 2028, which puts corn at 194.5 bu. and beans at 55 bu., both likely underestimated.

Farm Business—

  • “Using current market prices, projections for corn and soybean acreage place 2019 corn acreage at 91.1 mil. acres and soybean acreage at 85.7 mil. acres,” says IL marketing specialist Todd Hubbs.  But what could change that, wonders his colleague, farm management specialist Gary Schnitkey.  He says quickly, “The outlook for 2019 corn and soybean returns is lower than returns in recent years.”  And not much will change if yields continue to be above trend as they have been the past several years.  But he says something could happen to change price expectations, if an event occurs, such as resolution of the current trade conflict.  Raising the red flag for next year, Schnitkey says, “Projections are much lower for 2019, with operator and land return projected at $180 per acre, a $140 drop from the 2018 projection. At an average cash rent of $261 per acre, farmer return would be -$81 per acre.   The -$81 per acre projected loss for 2019 more than offsets the $56 positive return in 2018. Losses at this level would result in serious deterioration of financial position on many farms.”  The reasons being:
  • Yields are projected at trend yields for 2019. The 2019 projected yields are 210 bushels per acre for corn and 63 bushels per acre for soybeans. Both these yield levels are well below the above trend yields experienced in recent years.
  • Soybean prices are projected at $8.50 per bushel, well below the $9.63 per bushel average from 2015 to 2017. Much of this decline in prices can be attributed to trade disputes occurring between the United States and China.
  • No MFP payments. The MFP payments for 2018 production will add greatly to income.
  • Rising costs. Energy and fertilizer prices have increased resulting in higher corn and soybean costs. →
  • What could make that outlook better? Schnitkey says trade negotiations could end the Chinese tariffs on soybeans.  A $9.20 price and above trend yields, and a $276 projected return would result in slightly positive farmer returns given a $261 per acre cash rent.  He also says USDA may provide another Market Facilitation Program payment in 2019 that would result in returns being above the average cash rent.  He says poor Brazilian weather could mean higher prices unrelated to China; and with above trend yields, returns increase to $299 per acre, above the $261 per acre cash rent.
  • What could make that outlook worse? Schnitkey says below trend yields of 200 bushels per acre for corn and 60 bushels per acre for soybeans results in returns of $150 per acre, over $100 per acre below the average cash rent.  Lower market price resulting from an exceptional growing season in South America would lower world grain prices.  And production adversity such as insect or fungal issues would increase production costs, and lower net revenue.  Those not only increase outlays but could also reduce yields and net sales.
  • Crop insurance is a REALLY big safety net. American Farm Bureau Chief Economist John Newton says, “During 2018, nearly 80 percent of corn and soybean acres planted were covered by a crop insurance revenue protection policy at 70.5 mil. and 71.2 mil. acres, respectively.  Farmers paid more than $2 bil. in crop insurance premiums and had weighted average coverage levels of 77% for corn, 70% for soybeans.  At the beginning of November, USDA’s Risk Management Agency announced the harvest prices for corn at $3.68 per bu. and soybeans at $8.60 per bu.  For corn, the harvest price was 28 cents per bushel below the spring price, marking the sixth consecutive year that harvest prices have been below the spring prices established in February.  For soybeans, the harvest price was down $1.56 per bushel—the largest drop in harvest price since 2014.  When the harvest price is below the spring price, yield declines do not need to be as large to trigger indemnities due to implied coverage level multipliers. Coverage level multipliers, defined as the maximum of the spring price and the harvest price divided by the harvest price, boost yield coverage when the spring price is greater than the harvest price. When the harvest price is greater than the spring price, coverage level multipliers equal zero.  The price declines experienced in corn and soybeans this growing season have boosted the coverage levels under crop insurance. However, the expectation for record crop yields above the APH yields are likely to substantially reduce or eliminate crop insurance indemnities for many growers – despite experiencing very large price declines in both the cash and futures markets.
  • Will you be able to collect on your crop revenue insurance policy? Work out the numbers:
  • Corn: With a 200 bu. APH and an 85% crop revenue policy, your guarantee is based on the spring price of $3.96.  That calculates to $673 per acre.  Divide the $673 guarantee by the fall price of $3.68 and the policy would pay on any yield under 183 bu. per acre.
  • Soybeans: If you bought an 80% crop revenue policy on your beans, which had a 62 bu. APH, your spring guarantee was $504, with the spring price of $10.16.  Divide the $504 by the harvest price of $8.60 and find that any yield under 59 bu. will earn a check.
  • There is a growing chance farmers will receive the second promised “trade aid” payment from USDA resulting from the US and China tariff battle. Agriculture Secretary Perdue says, “We are continuing to look at market conditions. We are discussing this really as we speak.  Frankly right now, we see no change in the amount.”  Those payments would be on the other half of your production, at the rate of 1¢ for corn, $1.65 for soybeans, 14¢ for wheat, 86¢ for sorghum, 12¢ per cwt on dairy, and $8 per head on hogs.  But there is a declining chance of any similar payment in 2019.  USDA is not planning on it.  “Farmers are very resilient and adept in making their planning and marketing decisions based on the current market,” says Perdue.   “The facts are known now, so farmers, even under financial duress, will make their best business decision for 2019 without the expectation of a market facilitation program.”
  • Have you filed for your Market Facilitation Program payment? You can do it on line and not have to drive to the FSA office, with the new USDA internet website for farm programs and information.  Click on:  Apply for the Market Facilitation Program.  USDA says, “The application is one page, front and back, and shouldn’t take too much of your time. You’ll provide some basic contact information and specifics about commodities that have already been harvested to date.  You’ll need to sign the application form and provide production evidence, like receipts, for each commodity.”  And it can be submitted by mail, email, or fax.  USDA is not providing any guidance on whether the trade aid payments are to be included in your flex rent payments to land owners.
  • Do you measure seed expense on a cost per acre or cost per bushel? Purdue ag economist David Widmar suggests the best comparison may be comparing the seed cost to the amount of yield that it generates.  “We specifically considered how much yields have increased, how much seed expense has increased, and what share of additional revenue did changes in seed expense consume.  Since the late 1970s, increases in the national trend yield have been 71 bushels per acre. At $3.70 per bushel this is a value of $261 per acre. Over the same time frame, seed expense has increased $89 per acre. Or, in other words, higher seed expense accounted for 34% of the gains from higher yields.  The second column shows the same data but compares the average of 2000-2004 versus 2013-2017. During this time, trend yields increased 24 bushels per acre, or a value of $89 per acre. The change in seed costs during this time was $67 per acre. Over the last two decades, changes in corn seed expense have accounted for roughly 75% of the gains from higher yields.It is not surprising the overall share of seed expenses increased as there has been considerable substitution created via traits added to seed.  These traits have resulted in some chemical and pesticide expenses being avoided and added to seed costs.  The magnitude of this substitution is open for debate.  This comparison works for soybean seed as well.


After penalizing each other with billions of dollars in tariffs on their respective exports, President Donald Trump and Chinese Premier Xi Jinping reported a phone call Thursday that apparently set the stage for negotiations to end the trade war that has had a global impact.  Trump tweeted he had a long and very good conversation with President Xi Jinping of China, going on to say, that they talked about many subjects, with a heavy emphasis on trade. China’s Premier Xi Thursday said his country, the US and global markets have experienced negative effects from trade dispute between the two nations, said he would like to avoid further negative effects and believes both sides need to push toward mutually acceptable trade solution. Speaking to reporters before leaving Washington for the weekend, President Trump said, “I think we’ll make a deal with China, we’re getting much closer to doing something. They very much want to make a deal.” Any deal would have to be “a good deal for the United States” and a “fair deal” for both countries, Trump said. The two presidents are slated to meet during the G-20 summit in late November.  That does not allow trade staff much time to develop acceptable trade agreements that can be signed at the Buenos Aires conference.  And on the other hand, “The United States and China are not close to a deal to resolve their trade differences, the White House’s top economic adviser said on Friday, adding that he was less optimistic than previously that such an agreement would come together.  National Economic Council Director Larry Kudlow said on CNBC television that U.S. President Donald Trump, contrary to a report by Bloomberg, has not asked his cabinet to draw up terms of a China trade deal as he prepares to meet at the end of this month with Chinese President Xi Jinping. “There’s no mass movement, there’s no huge thing. We’re not on the cusp of a deal,” Kudlow told CNBC.  While China acknowledged the desire for an agreement, little else was revealed. A vice commerce minister told reporters at a news conference in Beijing that, “China is willing to resolve trade issues with the United States through mutually respectful talks and on an equal footing, and Beijing will jointly promote the healthy and stable development of China-U.S. relations.”  And Reuters reports President Xi Jinping said early today (Monday) that China will lower import tariffs and continue to broaden market access, though he didn’t seem to make any mention of whether he believes a trade deal with the United States is in the near future.

  • Hightower staff says, “A shift to a more optimistic tone over trade negotiations with China, along with a weakening US dollar and a shift to supply focus for the USDA reports (this) week are seen as bullish, short-term forces.
  • Jair Bolsonaro (new president of Brazil) says, “The Chinese are not buying in Brazil, they are buying Brazil.” And having a nationalistic political agenda, his anti-China attitude could get interesting for the US soybean grower.
  • Oil World Magazine says, “China is likely to buy a wider range of processed vegetable oils and animal feed meals on global markets in the coming weeks as the U.S./China trade war continues to reduce supplies of soybeans for China’s oilseeds processing industry.”

Farm Policy—

  • After Tuesday’s election the process of writing a new Farm Bill could change dramatically. Much depends on whether Ranking Democratic member Collin Peterson would see himself as chairman of the House Agriculture Committee and want to delay the Farm Bill deliberations until the new Congress is sworn in or proceed with the completion of the legislation.  While there are several differences between the House and Senate bills remaining, the primary difference between political parties is the House proposal for work requirements for recipients of the SNAP food assistance program.  That would disappear if a Democrat-led House committee revised the bill for 2019 passage, or if current Republican Chairman Mike Conaway saw the writing on the wall and dropped the plan just to get a Farm Bill passed this year.  IL farm policy specialist Jonathan Coppess says, “A change in either or both chambers, or a slimmer majority, may mean more scrutiny toward Trump’s handling of agricultural matters like the farm bill and the trade war.  “You can make an argument that” a Democrat-controlled House or Senate would be “more willing to stand up to the president,” Coppess, said. “A big question would be trade. Does a Congress which is less aligned with the president exert more checks and balances?”  Trump has invoked national security as a rationale for tariffs and a change in Congress may increase scrutiny of the White House, he said.
  • Once Congress returns to Washington, what will (could) happen with the Farm Bill? Congressional Quarterly agriculture reporter Ellyn Ferguson says, “if Democrats win enough seats, Rep. Collin Peterson, D-Minn., (left) could become the next chairman of the House Agriculture Committee, which could impact the nature of the lame duck negotiations.  “He would be getting some new members,” Ferguson said of Peterson and the committee. “And he would have to be, probably, educating some of those new members about the farm bill and the process.”  Current committee chairman Rep. Mike Conaway, R-Texas, (right) has not discussed an extension. Progress during the lame duck session will determine if an extension is necessary – and for how long.  “If they get to the point where they think some sort of compromise, it could be a short-term extension – something for maybe two, three, six months,” Ferguson said. “They would have to start it in a new Congress, but they would have a framework and they could speedwalk through this process.”  Ferguson said if the year ends without a farm bill compromise, a longer extension, as well as a new round of hearings, may be necessary.  She added that Senate Majority Leader Mitch McConnell, R-KY, has interests in the farm bill with his hemp provisions attached, which could also help move negotiations along in November.”
  • “I am optimistic that we will have a comprehensive Farm Bill on the books by the end of the year,” says Rep. Frank Lucas, R-OK. And that may be enough to take to the bank.  As the former House Agriculture Committee Chairman, Lucas drove the 2014 Farm Bill bus when there was even more contentiousness over SNAP requirements than this year.  If you remember, it was supposed to be a 2012 Farm Bill, but the GOP demands lasted 18 months, and the legislation finally passed in early 2014.  That is when parity prices were about to begin for milk, and that event will resurface January 1, 2019.  So when Lucas says he’s optimistic about a Farm Bill by the end of the year, he is speaking as someone who has been there, done that, and has a well-worn T-shirt.
  • Their desires won’t show up in the current Farm Bill debate, but the average American taxpayer wants Farm Bill money distributed significantly different than the programs that will be in the ultimate conference committee report. MS St. ag economists surveyed 465 adults and a majority want to see the overall farm and food spending increased, with more allocated to farm safety net programs, and raising Farm Bill funding of conservation from 7% to 22%, with most of the money taken from nutrition programs.  They also 19% of the budget spent on “other programs” which were summarized as encompassing research, marketing and regulatory activities, rural development, and food safety, which now get only 6%.

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This Week In Farmland Ownership – 8/30/18


  • Commodity market price drivers


  • Even when tariffs are withdrawn, will China return as buyer of US soybeans?  There are indications China wants to reduce the amount of protein in its livestock feed rations, saying animals could get by with less soybean meal.  The government’s China Feed Industry Association said a reliance on imported soybeans is creating a “bottleneck” for the country’s livestock industry, according to a CNN report.  “But getting millions of Chinese livestock producers to reduce the amount of foreign soy protein they feed is a dauting task that is likely to take a long time to carry out and could cause disruption throughout Chinese agriculture.”  Paul Burke, senior director of the US Soybean Export Council, at its Shanghai office says he thinks the Chinese government is trying to minimize the import of any US soybeans with its plan. He expects Chinese demand for American soybeans to fall if the proposals are implemented.  The real test will be in the coming months when Brazilian supplies dry up. A move to cut back on soybean use in China would need to be skillfully managed, and the government is likely to face a tough task steering millions of its pork producers across the country to follow the lower protein requirements.  Farmers may turn to alternatives, such as canola, cottonseed, and sunflower seeds, but it is not a straightforward swap, and some of those options have a limited supply, and too much canola can be fatal to animals. A rapid shift away from soybeans could create “chaos in the animal feed sector,” says Loren Puette of the research firm AgChina, based in Taiwan.  “There is no silver bullet that can be readily used” to replace soybeans, said Puette.
  • What is at stake, if China bolts from the US bean market?  Purdue economist Wally Tyner says the US would lose 9 mil. acres of soybeans to Brazil permanently if trade issues drag out.  Tyner said Brazil is a low-cost soybean producer compared to the U.S., making it a more attractive option for big buyers like China.  That’s why Tyner gives the trade negotiations a two to three-year timeline before acres start moving to Brazil. “This is going to be really hard, because there’s a lot at stake both for China and for the U.S.,” said Tyner. “Finding some common ground is not going to be easy. There’s so much at stake for both sides.”
  • Brazilian port officials report they exported nearly 150 mil. bu. of soybeans in the first 3 weeks of October.  That represents 130% more soybeans than in the same period a year earlier. That is significant for a country reported to be running out of soybeans, but indicates some soybeans reserved for domestic use might be shifted to export markets.  By the end of October, the International Grains Council projects that Brazilian soybean export shipments will reach nearly 190 mil. bu. Based on vessels prepared to load soybeans from Brazilian ports in November, nearly 100 mil. bu. are already booked for export, putting both October and November at record high levels for soybean exports for those months. 
  • On the flip side of those statistics is the limitation placed on US soybean exports by China, which typically purchases heavy volumes during October.  Reuters commodity analyst Karen Braun says, “On average, 76% of U.S. soybean shipments in October are to China. Not this year though. Statistics are alarming. Bean inspections to China, Oct. 1-18: 50 mil. bu. in 2018, Oct. 1-18, 2017: 125 mil. bu.   Year to date soybean shipment inspections to all destinations are down 40% year over year.
  • So far, US soybean exports are tracking the projection of USDA economists in the latest Supply-Demand report.  But as harvest typically wraps up at this time of year, and US soybeans have had the opportunity flow from elevators to barges to the Gulf, or from elevators to trains to the PNW ports, Nov. and early Dec will be key yardsticks to  gauge the rate of soybean export shipments and whether they will stay on track with projections.
  • While soybeans get the main focus, the soybean meal market should not be overlooked.  The International Grains Council reported, “Global soymeal trade anticipated to increase 2% year over year in 2018/19, underpinned by rising shipments to key markets in Far East Asia, with higher feed demand underpinning requirements.”
  • Most US farmers have had all the fun they can stand with tariff-driven marketing plans.  But farmers in South America are overwhelmed with governmental-driven frustration as well.  In Argentina the current government was elected on the promise of elimination of export taxes on grain.  They were removed from corn, along with a promise to phase out the export tax on soybeans. But 3 years later, the corn export tax is back at a 12% rate, and the soybean tax dropped from 30% to 28%, but is proposed to rise to 33% or 35%.  South American specialist James Thompson says, “The government’s main revenue stream cuts away at farm profitability.”  In Brazil, Sunday’s election put Jair Bolsonaro into the Presidential spot. While he has promised clearing more Amazon land for soybean production, he has made China very nervous with his criticism of their massive investment in Brazil, causing concern among Brazilian farmers they might lose their Chinese golden goose and its hunger for their beans.  “Two-way trade between China and Brazil stood at $75 billion last year, according to Brazilian government statistics. China has invested $124 billion in Brazil since 2003, mostly in the oil, mining and energy sectors. China is eager to bankroll railway, port and other infrastructure projects here to speed the movement of its Brazilian grain. But the far-right Bolsonaro, much like U.S. President Donald Trump, has criticized China repeatedly on the campaign trail, saying the Chinese should not be allowed to own Brazilian land or control key industries. Chinese diplomats made it clear they would like to meet Bolsonaro in person, although no meeting has been set.  Brazil’s farm sector, meanwhile, has reaped the benefit of China’s feud with Trump. Beijing has sharply reduced purchases of American soybeans, filling the gap with Brazilian grain. Brazilian exports of soy to China are up 22% by value this year with about 80% of its soy shipments now destined there. Bolsonaro’s first major meeting with the Chinese would come soon. Brazil hosts the BRICS summit in 2019, an event that Chinese President Xi Jinping is likely to attend.”

Farm Economy

  • The Federal Reserve Open Market Committee will be meeting this week to consider higher interest rates, based on economic conditions reported by the economists in the district banks.  Here’s what they had to say about agriculture in last week’s Beige Book:
  • Chicago Fed.  Greater-than-usual precipitation slowed the harvest and reduced the quantity and quality of crops, and expectations for net crop income fell accordingly. While expectations for yields were lower than in the prior reporting period, it was still likely that they would reach record levels. Contacts reported a notable drop in Chinese purchases of US soybeans following an increase in Chinese tariffs. Farmers also faced higher transportation costs due to rail issues, a shortage of truck drivers, and complications in shifting export destinations away from China. Contacts expected the record yields and weak export demand to push crop storage to abnormally high levels. Hog and dairy prices recovered some, boosted in part by US government purchases that were part of a program to compensate farmers for losses from higher foreign tariffs. Even so, dairy farmers continued to struggle. In addition, contacts viewed gains from the new US Mexico-Canada Agreement as too small and too far in the future to help dairy farmers. Moreover, Canada and Mexico maintained their tariffs on US pork and dairy that they imposed in response to US steel and aluminum tariffs.
  • St. Louis Fed. District agriculture conditions improved slightly compared with previous reports. Production and yield forecasts increased from August to September for corn and soybeans. Expected production levels also improved for cotton and rice during the same period, but yield forecasts decreased. Relative to 2017, District corn, cotton, and soybean yields are expected to increase, but rice yields are projected to decline. Production levels of all four crops are expected to be greater than those from last year.
  • Minneapolis Fed. District agricultural conditions remained weak overall. Persistent rain in early fall delayed or slowed harvests in some areas. Very strong harvests were expected around the District, including potential record yields in some cases. However, commodity prices remained weak, and greater production was not expected to completely offset the negative impact of low prices on farm incomes. International demand for crops, particularly soybeans, has fallen dramatically, according to contacts. A producer of dry beans reported that a large regular annual order from European Union countries was cancelled due to tariffs. A substantial number of dairy operations have exited the business this year.
  • Kansas City Fed. The farm economy in the Tenth District remained weak as expectations of increased production contributed to a slight decline in corn and soybean prices since the previous reporting period. Corn and soybean production were expected to be strong in Nebraska, which could offset some adverse effects of low prices. Crop yields in Missouri, however, weakened considerably from a year ago and could further strain farm income. The price of wheat was down slightly from the previous reporting period but remained higher than a year ago. In the livestock sector, the price of cattle increased slightly from the previous period but remained lower than a year ago as inventories generally remained high. In contrast to the prices of other agricultural commodities in the District, hog prices increased sharply in September due to expectations of lower production and higher exports.
  • Slowly, but surely the rural American economy is improving, according to the Rural Mainstreet Index of Creighton University.  It climbed above growth neutral in October for a ninth straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.  Survey coordinator Ernie Goss says, “Our surveys over the last several months indicate that the Rural Mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector.”  The farmland and ranchland-price for October sank to 34.8 from 37.5 in September. This is the 59th straight month the index has fallen below growth neutral 50.0. Bank CEOs were asked to estimate the change in farmland prices over the past 12 months and for the next 12 months.  On average, bankers estimated that farmland prices declined by 4.0 percent over the past 12 months and expect farmland prices to fall by another 3.2 percent over the next 12 months. According to Fritz Kuhlmeier CEO of Citizens State Bank in Lena, IL, “More than ever, farmland values are extremely dependent upon quality, and location, location, location.”   The October farm equipment-sales index fell to 33.3 from September’s 35.9. This marks the 62nd consecutive month that the reading has moved below growth neutral 50.0.

Farm Business—

  • Have you visited with your crop insurance agent about whether your crop revenue policy will have a payout?  Prices are well below spring guarantees, but many farmers are discovering their yields are too high to warrant that extra check.  Your farm may be different. While Central IL weather has been good for harvest, much of the Cornbelt has had miserable weather for harvest, and top yields have fallen below mediocre because of field losses attributed to the weather, particularly for soybeans.  The kicker comes when damage is more than elevators will accept, and it must be hauled to a salvage buyer, but crop insurance still counts most of the load as good production. Farmers have to alert their crop insurance agents within 72 hours of discovering the damage, and agents can start adjusting yields once damage hits 8% or greater, according to RMA’s factsheet.  Livestock feeders may be an outlet.  Terminal elevators may not be much of a market because there are plenty of beans available for blending damaged beans, but there are few markets right now for any soybeans.  “Under crop insurance rules, the farmer has to sell beans to any buyer in their marketing area as long as the damage level is under 35%. Soybeans with 35% damage or more qualify for a reduction in value, which allows crop insurance adjusters to factor the cost of shipping into viability of selling into a salvage market. They can then decide whether it’s worth it to the farmer to sell it or whether the crop insurance policy should pay an indemnity based on the farm’s guarantee.  If no salvage market is available, farmers need at least two and ideally three rejection letters from elevators to qualify for a zero-market value determination. And then, there is the damage that the outcome does to your Actual Production History (APH) and your Market Facilitation Program payment, says TN ag economist Aaron Smith.
  • How does your financial position compare with other Cornbelt farmers?  Some are in good shape, and others, not so good, according to the balance sheets of several thousand farmers surveyed by IL ag economists.  They looked at a couple of different yardsticks:
  • Debt to asset ratio. It is a measure of solvency, equaling debt divided by total assets. Generally, debt-to-asset ratios below 0.30 indicate a strong financial position. Debt-to-asset ratios above 0.50 mean the farm’s assets are funded by more debt than equity. Farmers with debt-to-asset ratios above 0.50 face more risk than those with less than a 0.50 debt-to-asset ratio.  Debt-to-asset ratios on Illinois grain farms had an overall downward trend from 1991 to 2012, decreasing from .34 in 1991 to a low of .18 in 2012 (see Figure 1). Since 2012, debt-to-asset ratios have increased to .21 at the end of 2017. While a general upward trend is not desired, the average debt-to-asset level at the end of 2017 is not particularly troublesome either.  In total, 87.3% of farms had debt-to-asset ratios less than 0.50, meaning a large majority of farms carry a level of debt that is less than half the asset level. At the end of 2018, there are 12.7% of these farms with debt-to-asset ratios exceeding 0.50, meaning debt levels are more than half the level of assets.  The percent of farms with above 0.50 debt-to-asset ratios has increased over time.
  • Current ratio. It is the measure of the working capital position of the farm. The current ratio equals current assets divided by current debt. Higher current ratios indicate that a buffer exists for meeting current obligations. This buffer is useful in countering any adverse events that may befall the farm. Current ratios above 2.00 are generally viewed as being very strong.  A ratio below 1.00 indicates a problematic current position, as not enough current assets exist to meet current obligations.  The average current ratio on Illinois grain farms increased from 1.97 in 2006 up to 2.86 in 2012 (see Figure 2). The 2006-2012 period had high commodity prices and costs had not increased enough to offset higher prices, resulting in a period of above-average incomes. This above-average income period allowed farmers to improve their financial positions and strengthen current ratios. Since 2012, commodity prices have been lower, and incomes have decreased, resulting in the current ratio decreasing from 2.86 in 2012 to 1.96 in 2017. The average 1.96 ratio in 2017 is not particularly worrisome, however, the 2017 level is the same level as in 2006, indicating improvement in the current position during the high-income years has been erased.   The current ratio of .83 is in the problematic zone below 1.0 for the weakest debt-to-asset category, those with a 0.75 or higher debt-to-asset ratio (see Table 1). On average, the current ratio is below 1.0 for farms with debt-to-asset ratios above 0.50.   These farms likely need to restructure assets or debt to improve the working capital position.
  • Is your fall fertilizer booked?  Most prices continue the higher trends begun earlier this year, and only anhydrous was steady at just under $500 per ton.  Urea rose about $20 per ton in the past week to more than $400, $60 higher than last fall. MAP was the only fertilizer to decline in price and that was negligible.  For a pound of N, urea is at 44¢, anhydrous ammonia is 30¢, and UAN is at 43¢.
  • Where does seed fall in your cropping budget?  Purdue ag economist David Widmar says seed prices have declined slightly, but have been a major part of the growing cost of crop production.  Corn seed expense (shown in orange) was mostly $40 per acre from 1975 through the mid-2000s. In 2005, the expense began to increase, reaching a high of $105 per acre in 2015. Most recently, corn seed expense has turned lower in recent years. For 2017, corn seed expense was $99 per acre, a $6.25 per acre decline, or 6% lower, over two years.  corn seed expense increased from $43/acre in 2000 to $99 in 2017 (in real terms). Over the last 18 years, the expense increased by 131%, or increased at an average annual rate of 5.1%. That is a significant rate of increase sustained over nearly two decades. Regarding soybean seed prices, while soybean seed expense was previously around $25 per acre and 6% of total production expenses, in 2017 it accounted for $58 per acre and 13% of total expenses.  Comparing soybean expense in 2000 to 2017, the change over 18 years has been slightly less than corn. In total, seed expense increased by 113%, equal to a 4.5% average annual rate of change. After initially resisting adjustments lower, seed expense for corn and soybean production have turned lower in recent years. Although the changes have been smaller than what was observed in fertilizer and cash rental rates, the improvement has been welcome. However, it is worth noting how much seed expenses increased during the farm economy boom. In most cases, seed still accounts for a historically high share of total production expenses.

Farm Policy—

    • While House and Senate Ag Committee leaders campaign, their staff members continue to work on elements of the new Farm Bill that have held up agreement between the chambers and the political parties. Lobbyists for the American Soybean Association report, “The optimistic forecast would be to have compromises worked out for the farm bill Conference Committee to approve after Congress returns on Nov. 13. Even under this best-case scenario, the Committee would have only three weeks, including the week of Thanksgiving, to prepare a Conference Report that both chambers could vote on before the 115th Congress adjourns.  This could happen on Dec. 7, when the Continuing Resolution funding government operations in FY-2019 will expire. A new CR could be passed extending funding through Dec. 21, which would give the farm bill effort another two weeks.”  And they project, “The 115th Congress will adjourn once funding for FY-2019 is approved in December.  If a new bill cannot be completed by then and, faced with expiration of the current dairy program after December 31 (the so-called “dairy cliff” which revives Depression era parity prices), an extension of the current 2014 Farm Bill would be necessary.  This would most likely be for at least one year rather than kicking it to the new Congress through a short-term extension.  There has been some talk of a three-year extension to get farm legislation beyond the next elections—and hopefully beyond the current volatile trade conditions facing U.S. soybean farmers.”


  • So, refresh my memory, what are the sticking points in the Farm Bill proposals?
  • In Title 1 (Commodities), the House would eliminate PLC and ARC payments for base acres that weren’t planted to a program crop in 2009 to 2017 and use the savings to allow farmers who experienced a 20-week drought during 2008-2012 to update their PLC and ARC payment yields.  Depending on how analysis of these provisions is done, an estimated 7 mil. acres of “underplanted” base would lose payments, while farmers in 417 counties in west Texas and neighboring states would receive about $500 mil. over ten years, primarily through higher cotton yields under the PLC program.  The Senate has not bought into this idea.
  • The House expanded farm program payment limitations in size and to recipients, while the Senate requires active engagements and reduces eligibility by lowering AGI limits.
  • The Title II (Conservation) change would merge the Conservation Stewardship Program (CSP) into EQIP, reducing the cost of supporting conservation practices on working lands.   The Senate does not want to merge the programs and does not cut funding
  • The major change in Title IV (Nutrition) is the tightening of work requirements and transfer of funds to establish state job training programs. Democrats and the Senate oppose this.
  • The Senate legalizes hemp production to replace the declining tobacco production, but the House version does not address that issue.
  • Expiration of the 2014 Farm Bill on Sept. 30 ended USDA funding for foreign market development programs used by the US Soybean Export Council, Grains Council, and other export promotion groups.  They are using reserve funds, but those will soon run out.
  • And finally, this—


  • Agriculture Secretary Sonny Perdue visited the heart of the Cornbelt last week at a Champaign County (IL) farm to stump for Rep. Rodney Davis, R-IL, but answered questions from about two dozen of the hundred attendees.  Among those:
    • Lender:  Trade policy has destroyed commodity prices, what is the end game?
      Perdue:  We need to get more markets in more places, dependency on China was too concentrated and we need to diversify. Chinese were easy, and it was easy to sell to them.  $200 mil. has been allocated for new market development.
    • Farmer:  Harvest is complete, and we were working on some NRCS projects, but told there is no money available because of no Farm Bill.  Why? This is the prime time for that work.
      Perdue:  Money should be good through end of the year, unless program is overspent.


  • Enviro. org. exec.: IL reducing nutrient loss in waterways, but not neighboring states. Farmers should not have to pay total cost, but what can be done to solve Gulf hypoxia zone?
    Perdue: Solution starts with NRCS programs on farms, precise nutrient application, and education to farmers. Big challenge because Mississippi is a big watershed.
  • Farmer:  When will EPA issue its ruling on dicamba?
    Perdue: Dicamba is interesting challenge, probably can do better job in application. Don’t know that it will be banned, will approach decision with science as seen in chlorpyrifos and glyphosate court cases.  Need science-based dicamba decision to be good neighbor.
  • Minister: For sake of farmers, they need to know if there will be 2nd trade aid payment.
    Perdue: 2nd payment planned, was misquoted that it was in doubt, but USDA will calculate potential payment in December, if trade issue continues to impact commodity prices.
  • Crop insurance agent: Will Farm Bill make any changes regarding AGI payment limitations?
    Rep. Davis:  Despite attacks on crop ins., but it is a good public-private partnership.
    Perdue:  His heart sank when he thought Davis was discussing a tax on crop insurance, until he realized Davis was referring to “attacks.”  He made no comment on payment limitations.


  • Farm org. officer: Continuing tariffs on Mexican and Canadian steel depressing pork and corn exports particularly in Mexico, which is the leading market for both commodities.
    Perdue:  That issue getting lot of White House attention, alternative to tariffs being sought.

Founder’s Story

My introduction into agriculture is centered around a farm that my family has owned in Central Wisconsin since the early 1980’s. The farm has 360 acres of Tillable land that had been rented to the same Grower for the last 25 years.  For this, I received rental payments of $60.00 per acre per year.

In 2015, I acquired a property approximately ½ mile to the south of the original farm which encompasses 180 acres of tillable land. The lease for the farm land rental was assigned to me which provided a base payment of $150.00 per year plus a flex arrangement that has averaged $45.00 per year over the past two years.  I was startled! The new property was going to provide me rental income that could approach 3 times the value of the original property lease. I would have never have known about this had I not undertaken the new purchase. This experience made me consider a few very fundamental questions:

Why is there no resource to help determine a fair market rental rate for agricultural land  like those that exists in residential and commercial real estate After all, agricultural land is just another form of real estate investment.
How can I identify new Growers if I want to evaluate alternatives? Additionally, how do I make it known that my land is available for rent?  I feel there would be great interest on the part of Growers if they knew the land could be rented to them.
Why do I not have access to the information about the activity that is taking place on my land? After all, it is my land!
When was the last time I re-evaluated my lease?  Do I even have one? Today’s technology should provide more efficient ways to administer and negotiate leases.
Collections of rental payments are manual and often difficult to collect on a timely basis.  Can this process be improved?
Shame on me, I should have asked these questions 25 years ago.  

As I started to work through the process of analyzing my situation, it became very apparent to me that even the most diligent landowners are encumbered with the same problems that I face. Unlike most commodity and real estate investments, there is simply no marketplace that creates price discovery for farmland rental values. Additionally, functioning marketplaces by definition provide unlimited access to data and information that facilitates decision making.  This is simply not the case with farmland rentals and sales.

When these questions were asked of the people that I trust in the area where the farms are located, they stated that these problems could only be resolved by engaging a farmland management company. Based upon this recommendation I spent a fair amount of time analyzing the different companies that compete in this industry and the services that they provide.  

After the investigation period I came to two (2) conclusions. The first was that I did not feel that they could resolve my problem because they were not creating a marketplace, nor was I impressed with their level of technical sophistication. By harnessing current technology the process of managing farmland can be efficient and simple. Most importantly however, I was not looking for an outside party to manage my land.  

I was convinced that with the proper use of today’s technology, a resource could be created that would empower all Landowners to professionally manage their own properties independently.   Welcome to Tillable!

Intro to Flex Leases

In one of our previous blog posts on Calculating Cash Rent we outlined different ways to calculate cash rent. More than anything that exercise reveals the shortcomings of the cash rent model and the difficulty of coming up with a cash rent that doesn’t leave too much money on the table while at the same time not opening your farmer up to potential disaster if mother nature doesn’t cooperate in a given year. Flex leases are a relatively new approach to solving that problem.

The biggest challenge with cash rents is trying to guess how much the land is worth without knowing the gross revenue it will produce. Flex leases eliminate a lot of the guessing. There are many different types of flex leases, but most retain the following characteristics:

  1. The rent paid adjusts automatically depending on yields and prices
  2. Risks and profit opportunities are shared between owner and tenant
  3. Owners are paid in cash and do not have to be involved in grain marketing or input decisions

The downside to flex leases is that they can be complex and they depend on your ability to gather good information. We at Tillable think flex leases are a great approach and supporting flex leases and the the data gathering that takes place, will be a core offering of our platform. 

Types of Flex Leases

Flex leases generally fall into two categories:

Option 1: Gross Revenue à Rent paid at the end of the year based on the actual yield X the actual price of corn X 35-40%

Option 2: Base + Bonus à A base rent is determined and a bonus is paid after harvest that is dependent on actual yields and prices

If you decide on the first option you should consider a higher overall percent of the gross revenue because your farmer doesn’t need to pay any rent upfront eliminating the cost of credit.

There are a lot of different types of flex leases out there, but most variations fall under category two and the place where they often diverge is how to determine the bonus.

The base is normally set lower than a competitive cash rent. There are two approaches that we believe are fair, 1) take 80% of a competitive cash rent for your farm 2) set your base using the Productivity Index adjustment calculation: Base Rent = (Field PI/Co Avg PI) X price of corn X 4 yr. Co yield X 30-38%. (For more information on this approach and to find out where to find the information for the inputs, read our blog on Calculating Cash Rent)

There are many different approaches to calculate the bonus, but one we like is: Bonus = (price of corn X actual yields X 30-38%) – Base Rent

By using a base + bonus approach you make sure that you aren’t leaving any money on the table, are consistently fair to your farmer (and vice versa) and that your farmer doesn’t go bankrupt if mother nature or the commodity markets don’t cooperate in any given year.

Determining the Price of Corn and Yields

To determine the price in the calculation above we recommend selecting a local grain elevator and taking an average of the price from that elevator over the 9-12 months of the lease. A local grain elevator is often chosen to accurately account for location basis, which is the cost of transporting grain from a local elevator to a market.

An alternative approach is to use a market index, like the CME Group, but make an adjustment to the price that accounts for the location basis.

Tracking Yields

There is now more information available than ever before to help you accurately track yields, gone are the days (well mostly) of hand written scale tickets. Most scales have digital tickets, or at least printouts. You should be collecting these from your farmer as well as data from a precision agriculture tool, like Climate FieldView, My John Deere, Agleader, etc. Below is a screen shot from Climate FieldView that shows the yields for a particular field. We obscured identifying information, but you can still see how powerful the data is that FieldView and similar tools can provide.

Fieldview sample

You should make sure your farmer is using one of these tools and providing you with yield information. Or better yet, let Tillable do it for you. One of the advantages of Tillable is we gather all of the data for you and we will even do the flex lease calculations and make sure the money is automatically transferred to your bank account.


A flex lease is a fair solution for both a `landowner and the farmer. They are a little more difficult to administer and they do require gathering information on pricing throughout the year as well as on yields. Accurate data is critical – make sure you are requiring both scale tickets and yield information from a precision agriculture tool.

Flex leases certainly go a long way towards solving the problem of fairness when it comes to farmland rents, but they won’t help you understand whether or not you have the best farmer on your land. Tillable’s process not only helps you find a great farmer, but we provide you with comparisons to similar farms so that you understand how your farm and farmer are performing. The difference between an average farmer and a great farmer can be 20% a year.

Calculating Cash Rent

U.S. farmland is under-rented by an estimated $8 billion per year. It’s estimated that in 2017 in Illinois alone, landowners left ~$1.2 billion on the table. This is not about jacking up the price on farmers—most people will agree that cash rent should be between 30-38% of the gross production value of the land—but at least 50% (likely more) of landowners are well below that range. Are you getting paid fairly?

Below we will outline some of the most common methods for calculating cash rent as well as where to find information to plug into those formulas. However, we believe the best way to find out what your land is worth is not a formula; it is to depend on the people who know the most about farmland: farmers. Tillable creates a marketplace where you receive offers from qualified farmers to farm your land (no calculations needed!). It isn’t an auction, as you choose who farms your land (which may be your existing farmer), and the person willing to pay the most isn’t always the best person to protect your asset.

The calculations we outline below should get you in the ballpark, but to find out what your land is really worth, as well track performance year over year, try our approach by creating a free landowner account on tillable.com.

The Most Common Approaches to Calculating Cash Rent

Below are the 5 most common ways to calculate cash rent. We will walk through the process of calculating cash rent using a couple of these methodologies. For the purpose of this exercise, let’s pretend it is February 2018. We don’t know if it will be a good year for yields or corn prices and we have to make the best use of the info we have available to calculate cash rent for the upcoming year.


Option number 1 is the most basic formula, and arguably the best with perfect data. The problem is getting the right information. If you are setting the rent in late February, how do you know what yields will be and what the price of corn will be in the fall? There are a couple of techniques that can help you make an educated guess, which we review below.

Option number 2  can be useful if you just bought the farmland, or if you happen to have very good information on the approximate value of your farmland. However, even if you have great information on how much your land is worth, we suggest only using this as a reference point. 

Option number 3  might be the fairest and the most accurate in a perfect world, but unfortunately it is overly dependent on your farmer for information. Because of that, we are going to put this approach to the side.

Option number 4  adds a new component. It attempts to adjust the rental calculation based on the relative quality of your land. The PI (Illinois only) adjustment calculation recognizes that USDA data, which is often the only information available to many people, is based on averages and takes that fact into consideration to adjust the rent up or down based on the relative quality of your land.

Option number 5  is probably the most common approach and the most flawed. Not all farmland was created equal, and relying on what other people are getting for their land without knowing how it compares to your own land is not a good approach by itself.

Data, Data, Data.

Like any calculation, the formula is only as good as the data you plug into the formula. That’s why if at all possible you should be collecting real data from your farmer.

In the last 10 years, precision agriculture tools have come a long way. There is a good chance that your farmer is already using one; in fact, we strongly recommend only working with a farmer leveraging one of these tools. In our first year, more than 70% of the farmers making offers on a farm listed on Tillable already used one—such as Climate FieldView, My John Deere, Agleader, etc.

To give you an idea of just how powerful these tools are, below is a sample of data from a farmer using Climate FieldView. We will use this farm and farmer as the sample for our calculations moving forward. We have obscured information to protect the innocent, but the important bits are still visible.

Fieldview sample

From this image we can see that in 2017 this farmer had an average yield of 267 bu/acre for this field. We can also see that he harvested 189.4 acres. In addition to info from a precision agriculture tool, you should also be receiving scale tickets. The tools can have calibration issues, or malfunction, so it’s best to get both.

This data is from 2017 and for the purposes of our exercise, we don’t yet know if 2018 will be better, or worse, but it is helpful to have data from the last couple of years. In the absence of a crystal ball, past yields are the best indicator we have of future yields, so you should always have a record of how your field is performing. For now, put this information to the side and we will go gather some more.

The next place we want to go for data is the USDA. For those that don’t have real data, this is likely where you will have to start. Although USDA gathers a ton of data, it is unfortunately only available in the form of averages.

Averages are great for telling us that farmland in one county rents for more than farmland in another county, but they don’t help much when it comes to telling us what fair market rent is for a specific farm. However, it’s still a useful reference point. Go to https://quickstats.nass.usda.gov to find the averages for your county.



The county for our sample farm is Kane County, Illinois. So using this tool, we get the information for the average rent in Kane County, as well as county average yields for the last 4 years (see below).




The next piece of data you should gather is on the relative quality of your farm. In Illinois this is indicated by something called the Productivity Index (PI). In Iowa they use CSR2, but in most of the “I” states, there is a way to find out how your farm’s soils compare to others. One place to do this is at a site called Acre Value. They offer a free one-week trial, and you should only have to do this once. Find your farm and make a note of the farm’s PI (or whatever ranking mechanism your state uses). Below is a screenshot of our sample farm in Kane County.



This particular farm has a PI of 133.1, which is pretty good and puts it just over the line as class A farmland.

The last piece of the puzzle is price. How do you predict the price of corn in December of 2018 when it is February of 2018? The futures market, of course. Now, nobody can predict the future, but this is the best tool available to us. A good site for this is the CME Group. Corn futures can be found here: http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn.html.

The actual corn future price in February of 2018 for December of 2018 was $3.58/bu. In February of 2018, that was the bankers’ best guess at what the price would be in December.

So here’s the data we have gathered so far:

Sample Field: 205 Acres, 189.4 Tillable Acres, Kane Co, IL

  • 2017 Actual Yields: 267 bu/acre
  • 2017 USDA County Average Yield: 176.4 bu/acre
  • USDA 4-Year County Average Yields: 189.2 bu/acre
  • USDA County Average Rent: $244
  • Field PI vs. County Average: 133.1/124.3
  • Price of Corn: $3.58 bu (actual futures price the last week of February)

Let’s do some basic calculations to provide us with a couple of reference points:

How much was this field worth in 2017?

  • 267 bu X $3.37 (Dec ‘17 corn price) X 35% = $314.92/acre
  • 29% higher than the 2017 county average rent

How much better is the field than the county average?

  • 133.1/124.3 = 1.07 = 7% better than the county average

How much better were the 2017 yields than the county average?

  • 267/176.4 = 1.30 = 51% better yields than the county average


A couple of observations:

This person is a good farmer. His yields were 51% better than the county average and his field was only 7% better, according to the PI adjustment calculation. Based on actual yields and actual prices in 2017, the fair market rent was ~$315/acre, which was 29% higher than the county average.

The next step is to plug in some of the information that we gathered into the formulas we outlined above to calculate cash rent:

Option 1: Rent = price of corn X 4-yr. co avg yield X 30-38%

$3.58 x 189.2 x 35%=$237.07


Option 2: Rent = (Field PI/Co Avg PI) X price of corn X 4 yr. Co yield X 30-38%

1.07 X 189.2 X $3.58 X 35% = $253.66


Option 3: Rent = value of land/acre X ROI

$8,125 X 4% = $324/acre


The first option doesn’t take the relative quality of the field into account, but it does tell us that based on 4-year county average yields, the county average rent should be ~$250/acre.

The second option adjusts for the relative quality of the field, and I’d make this the baseline rent for this field. Why make it the baseline? Because it tells us what we should expect an average farmer to achieve on this field given the pricing assumptions.

The last option is a gut check—a reference point. This data comes from Acre Value and should be taken with a grain of salt. No farm in Kane County sold for less than $9,000/acre last year, which tells us that the valuation offered by Acre Value is probably low and the cap rate we are using is probably high. Again, this calculation is really only useful if you have just purchased the farm.

One thing we learn from this exercise is that farmers grow commodities, but good farmers are not commodities. After adjusting for the relative quality of the field, our sample farmer is producing yields 44% higher than the average farm in Kane County. That means that he is able to pay the landowner significantly more than an average farmer, while still keeping more for himself.

So what should cash rent be? We have one last calculation to share with you before we give you that answer. The following calculations are derived from data that we ran through the Tillable platform last year. If $267/acre is the bottom of the range for this field, then the following formulas will give us a better idea of the top of the range and what we should expect from an elite farmer.

Tillable Cheat Sheet

Using this formula and the 2017 USDA Co average, the cash rent for this field comes out to $315/acre. That number also happens to be the fair rent for 2017 based on the real numbers. 2017 turned out to be a great year for yields in Kane, but a bad year for corn prices. The futures market says that corn prices will be slightly better this year, so with that data we feel that $315/acre is a fair cash rent for this farm in 2018 for this farmer.


At the end of the day, calculating cash rent really is just a best guess; we ended up with a range from $267 to $315. We believe $315 is fair for this farmer, but if anything, this also tells us that having the right farmer is as important to our return as any other factor.

With the right data, you can make a more informed guess, but there is no silver bullet or magic formula. It is especially difficult for somebody who isn’t a farmer to guess what the land is capable of producing in any given year, not to mention what the price of corn will be in 9 months.

That’s why at Tillable we depend on a marketplace to determine a fair market rental value. We depend on farmers because they are the best-equipped to make these calculations based on their experience. Once the fair market rental is set based on real market data, we keep landowners up to date on how their farm is performing by providing anonymous comparisons to other similar farms. This data helps landowners understand if their farmer is 1) taking care of the asset for the long term and 2) achieving competitive returns.

Why Farmland is a Great Investment

Do you own farmland? If so, congratulations! We outline below why farmland is so valuable and why if you own some, you should hang on to it!  However, if you want your farmland to perform like an investment, you need to manage it like an investment. Fortunately, Tillable makes it easier than ever to earn fair market rent for your farmland and help make sure your asset is being well taken care of.

Warren Buffet famously said that given the opportunity he’d invest in farmland over gold, read below to find out why.

Farmland’s Historical Performance

Farmland isn’t the sexiest investment out there, but historically it has outperformed the S&P 500, Nasdaq, Gold, Real Estate and Timber.

Just look at the chart below.

Historical Performance

Not only has Farmland out performed these other investments, but the standard deviation is also much lower – what does that mean? It means that the booms and the busts are smaller making it a lower risk investment. That makes it a great investment for those who don’t like riding the ups and downs of the stock market roller coaster. It also makes it a great store of value, which is recognized by many large financial institutions – farmland is their version of money under the mattress, a low risk investment that will provide nice stable return. TIAA, Hancock, and UBS own billions of dollars in Farmland for this reason.

The next chart outlines how farmland has performed compared to other real estate investments from 1992 – 2016. Farmland rarely leads the pack with the exception of 2005 when ethanol drove a boom in appreciation, but it also doesn’t crash in 2008 and 2009 like other real estate. It’s the investment version of the tortoise and the hare providing steady returns that eventually win the race.


Average (’97 – ’11) Standard Deviation
Farmland 12.41% 8.16%
Retail 10.51% 8.63%
Office 10.26% 11.15%
Industrial 9.86% 9.76%
Apartment 9.86% 9.82%
Timber 7.57% 8.04%
Hotel 7.21% 11.56%


But there is one characteristic that makes farmland unique among asset classes. These last two charts help outline the real secret as to why Farmland is valuable and why if you own some you should think very carefully about ever selling it.

The Secret is Productivity



Since the 1960s farmland productivity has nearly tripled. What does that mean? It means that the same acre of land produces three times as much corn as it did in 1960. If corn prices stayed the same and never changed, the production value of your land would increase by roughly 2% a year. Those increases in productivity are the results of research and investment from seed companies, equipment manufacturers, and universities and as a landowner you benefit from those gains in productivity without having to spend a dime. That’s like owning a multi-unit building that grows a new unit every year without any additional investment. That’s a pretty good deal.

But what about costs? Even though productivity is going up, costs must be going up too right? It is true that tractors, seed, fertilizer, and fuel are more than they used to be, however, as the next chart illustrates, the overall costs have remained stable largely because cost increases have been offset by reductions in labor, keeping inputs stable over time.


So farmland is producing more with roughly the same investment as 60 years ago. This is one reason why food prices (and corn prices) have remained so low overtime. The land produces more ensuring that supply keeps up with demand keeping prices low. However, should farmland productivity stop going up that means that supply will no longer be able to keep up with demand and food prices will rise, which in turn will cause the value of farmland to rise as well. No matter what happens farmland’s value goes up.


Historical returns from farmland have outpaced many other more popular investments like the S&P 500, Nasdaq, Gold, and multi-unit real estate. Gains in productivity play a role in driving the value of farmland, as well as higher rents. However, for your farmland to perform you need to treat it like an investment, which means making sure you are receiving fair market rent and that the nutrients that are removed form the soil are put back in maintaining the asset for the future. Fortunately, Tillable makes it easier than ever to manage your farmland and get the returns you deserve.

How does Price Discovery Work?

It’s estimated that US Farmland is under rented by $8 billion dollars a year meaning that many people are not receiving fair market rent.

For many people maximizing the rent is not their first priority, they are more than willing to sacrifice revenue in return for having somebody that they trust on their land. Regardless of your approach, Tillable’s goal is to supply landowners with information that enables them to make informed decisions. With Tillable you are always in control and your decisions are just that – your decisions – but Tillable gives you information and options.

In other posts we explored different approaches to determining fair market rent for your farmland. We explored different methods for calculating cash rent and one way to structure a flex lease. However, neither one of those approaches really solves the problem of understanding what the fair market rent is for your farm, which is one reason why we created Tillable.

Price Discovery

The price discovery process is the process of determining the price of an asset in a marketplace through the interactions of buyers and sellers. This is how most of the free world operates and is a cornerstone of free market economics. Today no price discovery, or very limited price discovery (i.e.: asking people at the coffee shop how much they’d pay is technically a form of price discovery) exists for renting farmland.

To achieve price discovery you must have a marketplace and that is one of the primary functions of Tillable. When it comes to pricing farmland we believe in farmers over formulas. Tillable is an online platform that allows you to list your farmland and receive offers from farmers helping you determine the fair market rent for your farm through the interaction between buyers (or farmers) and sellers (you).

One of the most common questions we receive after we explain how we deliver price discovery is, “do I have to switch my farmer?” The answer is no. You are always in control. However, by going through the price discovery process you will see what other farmers are willing to offer, which will make it easier to negotiate with your current farmer and give you options should those negotiations fail.  If switching your farmer is not an option for you, you should at least understand the extent of the discount you are likely giving  your current farmer.

The second question we often receive is, “do I have to go through the price discovery process every year?” Again, the answer is no. Once you establish a fair market rent you don’t need to go through the process again unless you are unhappy with your farmer. Every year Tillable provides landowners with a scorecard to let you know how your rent, yields, and soil management practices, among other things, compare to similar farms and fields. So if you own class A farmland in a certain geography, you will receive comparisons to similar class A farmland providing you with much needed context to understand your farm’s performance and either provide you with confidence that your farmer is doing a good job, or provide you with an indication that you should consider finding a new farmer.

We understand the relationship between landowners and their farmer can be deeply personal, but your farmland is an investment and you deserve to be fairly compensated.

Listing Your Land

As a landowner you list your land on Tillable and supply all interested farmers with any information that you have on the farm. It’s ok if you don’t have complete information, once you identify your field we can help gather other relevant information from public sources to ensure farmers have all the data they need to make an offer.

Below is a sample of what a listing looks like.

image (1)

Once your land is listed interested farmers will make offers based on your listing criteria. If you have special criteria, like organic farming only, no till, or even a requirement for an apple pie once a year – put those in the listing. Once you choose a farmer those additional criteria will also become a part of your lease.

Choosing a Farmer

Most people are surprised by the number of offers they receive and the quality of the farmers they attract. On average farms listed on Tillable receive 18 offers.

Each offer comes with additional information about that farmer including how long they have been farming, distance from their operation to your farm, total number of acres they currently farm, and the farming practices and philosophy that they employ.

Tillable summarizes the data from all of the offers so that you can select for the criteria that are important to you, as well as see how different skills correlate with the offer made by each farmer.

For example the graphic below is a histogram of cash rent/acre offers made on a farm listed for the 2018 growing season.

Screen Shot 2018-05-10 at 9.25.15 AMThere is a host of offers to choose from. From looking at this chart we can determine that the top of the market for this farm is $315-330/acre. We can also see that taking anything below $270/acre would be accepting too little.


The next step is to look at the farmers that best meet our criteria. For example we could also look at their farming experience compared to their offer.

Screen Shot 2018-05-10 at 9.25.55 AM

This chart reinforces that some of the most experienced farmers are also making high offers. If experience is important to you, you might sort on experience instead of price, or maybe find the best combination of both.

Tillable will also provide you information on how many acres they are currently farming.

Screen Shot 2018-05-10 at 9.25.30 AM

This data is important because most farmers struggle to grow their operation by more than 20% a year. If adding your farm means surpassing that 20% growth threshold for a farmer make sure you are comfortable with their plan to expand and their ability to manage that growth.

In addition to pure data Tillable will provide you with a detailed profile on each farmer  including any additional information a prospective farmer wants to share about their philosophy and approach to farming.

At the end of the day Tillable supplies you with information and you make a decision. True price discovery requires receiving multiple offers (more than what you will find in the coffee shop) and even if you are set on renting your farm to a family friend, it is still useful to understand just how big a discount you are giving them.


The only real price is what somebody is willing to pay for something. Tillable helps you understand what farmers are willing to pay to rent your farm.

When Americans sell just about anything of value – a car, a house, a boat, a computer, etc. we seek multiple offers for that item. If we are selling it to a friend at a discount, most people still look at market prices to determine just how big a discount they are willing to give to their friend.

Farmland is different. It is an asset that needs to be taken care of and protected for the future, but a good farmer can both take care of your land and pay you what you deserve – taking care of your land is important, but it also isn’t an excuse not pay you what your land is worth.

Tillable’s marketplace offers true price discovery so landowners can understand what their farm is really worth. In addition, Tillable’s data collection ensures that landowners are earning what is fair and keeping a record of their farms production capability building value for the future. You can read more about how we collect data for landowners here, but in the meantime please consider signing up for Tillable and finding out how much your farm is really worth. Signing up is free and you only pay Tillable in the first year if we help you increase your rent.

Farmers, Here’s What You Need to Know About Tillable

When farmers first hear about Tillable, the reaction is often the same.  It’s just another auction site where the highest bid always wins, price is the only thing that matters.  That is not the way Tillable works.  Tillable is not an auction site and our process is designed to be fair to farmers using proven economic principles.  We also ensure that a farmer’s entire operation, how they farm, and their experience are considered by landowners, not just the price/acre.

That doesn’t mean that price isn’t important.  We want to be clear that one of our primary goals is to make sure that a landowner is being paid fairly for their farmland.

Our process is called Price Discovery and relies on the following components to ensure a fair market rent:

  • No target price
  • Blind offers
  • Equal access to information
  • A level playing field

1. Our Process

No target price.

What that means is we won’t tell you what the previous year’s rent was on a farm.  This forces each farmer to do their homework. We want you to determine what this farm is worth to your operation based on the information that you have available without any guidance or coaching.

Blind offers.

You can’t see what another farmer offers and they can’t see what you offer.  You must do your own homework. This also prevents the price from being artificially inflated, or “bid-up.”

Equal access to information.

Every farmer has equal access to information.  If the landowner answers a question, the answer to that question is posted in the Q&A section of the listing for all interested farmers to see.  If there is lots of information on a farm every farmer has that information, if there is limited information on a farm, every farmer has limited information.

 A level playing field.

Our goal is to ensure a fair market rent and protect the long-term value of the asset.  Auction platforms bid up the price per acre making it difficult for a farmer to follow appropriate soil management protocols and still make money.  If you make an offer on Tillable you are required to report your yields, and fertilizer and nutrient applications.  This ensures that all offers account for the cost of soil management.  Additionally, if a landowner has specific requirements, like no till and use of filter strips, all offers must take those requirements into consideration.

The market for renting farmland is very inefficient.  The market often lags real economic conditions and prices are slow to go up, but once up, rarely come down.  We believe that our marketplace will help address these inefficiencies by taking a real market approach to renting farmland.  We believe in farmers over formulas, it is you, the farmers, that determine the fair market price for a farm on Tillable.

2. How we make money.

In the first year, we collect 30% of the increase in rent from the landowner and 2% from the farmer.  That doesn’t mean that we believe rents should go up on all farms. What it means is that when we help a landowner determine that their farm is underpriced, we get paid.  Which we think is fair. We think that we have built a process to price those farms fairly, meaning that when the rent increases on a farm it is because it was previously undervalued, not because the price was artificially inflated by our platform.  Every year thereafter we collect 2% from both farmers and landowners.

3. Does “Price Discovery” happen every year?

No, not necessarily.  The landowner can choose to not publicly list a farm, opting to keep you as a farmer. You and the landowner can negotiate directly using information from Tillable to help you both understand current market trends.

Our goal is to develop long-term relationships between farmers and landowners where the relationship is built on a fair price and documented stewardship of the land.  Our platform documents all farm activities using technology providing reassurance to a landowner that their farm is being taken care of. Even if their farm does not go through the price discovery process, Tillable will provide both landowner and farmer with information to reach a fair market price year after year.

The land farmers rent is likely one of the most valuable assets that a landowner possesses.  Tillable helps them ensure that the asset is protected and that your efforts to protect it are recognized and documented.

4. My landowner decided to use Tillable, will I lose the farm?

Maybe, but the odds are in your favor.  Most landowners keep their farmer. Many join the platform because they believe in the long-term value that Tillable adds to their land through record keeping and ensuring a fair market rent, they don’t necessarily join because they don’t like their farmer.

If your landowner has listed on Tillable, you will need to make an offer through Tillable.  If the landowner chooses to continue their relationship with you, you will sign a new lease through Tillable and Tillable will collect payments, and collect data for the landowner.

5. Are the farms on Tillable real?

Yes.  Every farm listed is real and if the description says it is accepting offers, than it is accepting offers.  However, if you read the section above then you know that at least some portion of those farms already have a preferred farmer, somebody that because of their relationship has an advantage on that farm.  However, there are always farms that have no farmer. We can’t tell you which is which, but you have an opportunity to win every farm that is listed and put yourself in front of a landowner that is interested in understanding the true demand for their land.