MFP and CFAP payments buoy cash rents
A farm management specialist points to government aid as one of the biggest reasons cash rents held steady over the last year.
Gary Schnitkey with the University of Illinois tells Brownfield there was little change between 2019 and 2020.
“What helped keep them at stable levels was MFP payments and CFAP payments this year. But MFP payments last year when we were setting rates.”
He says without those payments, many farmers will be cash-starved. And Schnitkey is concerned that’s exactly what will happen in 2021.
“We’ll see large losses at the current rent levels, and we’re thinking corn prices in the $3.50 range and soybean prices in the $8.60 (range). That just doesn’t leave a lot of funds there to make cash rent payments.”
He says landlords and tenants will need to discuss expectations of CFAP or MFP continuing as they begin negotiating cash rents for 2021. If they don’t think one or both programs will be around next year, Schnitkey strongly suggests lowering rates.