Farmland owners and operators have several lease options when it comes to renting cropland…but which one pays the most?
Agricultural economists at Purdue University recently looked at that question, examining farmland lease returns over the past 20 years.
According to Michael Langemeier, the director of the Purdue Center for Commercial Agriculture, “Leasing land is one of the most important financial decisions in U.S. agriculture, and for most operations, it directly affects cash flow stability, exposure to price swings, and long-term profitability per acre.”
His findings show there’s no clear winner.
He adds, “Fixed cash rent provided the most stability, while crop share and flexible cash rent were far more volatile, rising faster in strong markets, but also falling more sharply in years with weaker prices. That distinction is critical because it shows there is no single best lease in all environments; only trade-offs between stability and upside.”
In fact, Langemeier found returns between different lease types could vary by more than 100 dollars per acre in a single year.
“That kind of swing tells us something important: crop share leases amplify market cycles. When commodity prices are strong, they can outperform fixed cash rent, but when margins are tight, they tend to lag.” He said.
Find out more of Langemeier’s finds here:
