Long-Term Cash Rent Decisions Webinar December 18, 2015€¦ · Long-Term Cash Rent Decisions...
Transcript of Long-Term Cash Rent Decisions Webinar December 18, 2015€¦ · Long-Term Cash Rent Decisions...
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Long-TermCashRentDecisionsWebinarDecember18,2015
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Long-TermCashRentDecisionsWebinarDecember18,2015
Long-TermCashRentDecisionsWebinar,December18,2015
Needmoreinforma,onregardingcashrents?Lookforthisar,cleonhomepageoftheCenterforCommercialAgriculture’swebsiteag.purdue.edu/commercialag
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Long-TermCashRentDecisionsWebinarDecember18,2015
Long-TermCashRentDecisionsWebinar,December18,2015
MoreResources• Moreinforma>on&sampleleaseformsavailableonPurdueCenterforCommercialAg’swebsite:
– ag.purdue.edu/commercialag
– Clickon“Farmland”&Lookfor“RentalArrangements”
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Long-TermCashRentDecisionsWebinar,December18,2015
CroppricesRISEfasterthancostsadjustupward:Posi>veMargins
CroppricesFallfasterthancostsadjustdownward:Nega>veMargins
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Long-TermCashRentDecisionsWebinar,December18,2015
Fer,lizer18%
Seed15%
Pes,cides5%
Fuel6%
MachineryRepairs3%
Hauling2%
Interest1%
Insurance&Misc.4%
Machinery&FamilyLiving19%
CashRent27%
2016Es,matedIndianaCornProduc,onCosts
1
2
3
4
What’sarethebiggestcostissuesfacingcropagriculturethisyear?
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Long-TermCashRentDecisionsWebinar,December18,2015
TheCashRentDilemma
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Long-TermCashRentDecisionsWebinar,December18,2015
MakingLong-RunDecisionsØ Farmersdecisiontorentfarmlandiscomplicatedby
ü Downturninexpectednetreturnsforcornandsoybeansü Landowner’sreluctancetoreducecashrents
Ø Ques>onsthatNeedtobeAddressed1. Ifyouexpecttolosemoneyin2016onatractofrentedland,should
youcon>nuetorentthetract?
2. Howmuchofapremiumcanyoupaytoretaincontrolofatractun>lnetreturnprospectsimprove?
3. Howdoespayingapremiumaffectyourfarm’sliquidity?
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Long-TermCashRentDecisionsWebinar,December18,2015
AnOp,onsBasedDecisionToolLongTermCashRentSpreadsheet
ü Inputsforthespreadsheettool1. 2016BudgetsforCorn&Soybeans2. PricesandYieldsforNextFiveYears3. WorkingCapitalatBeginningoftheYear
ü Outputsfromthespreadsheettool• RentAnalysis
1. MarketCashRent2. BreakevenCashRent3. PremiumofMarketoverBreakevenCashRent
• WorkingCapitalAnalysis
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Long-TermCashRentDecisionsWebinar,December18,2015
YourBudgetInputs
(inblue)
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Long-TermCashRentDecisionsWebinar,December18,2015
YourBudgetInputs
(inblue)
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Long-TermCashRentDecisionsWebinar,December18,2015
Long-RunInputs
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Long-TermCashRentDecisionsWebinar,December18,2015
Inputthelocal
marketrateforcashrent
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Long-TermCashRentDecisionsWebinar,December18,2015
Analysiscomparesbreakevencashrenttomarketrate&impactonworkingcapital
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Long-TermCashRentDecisionsWebinar,December18,2015
TheBo^omLine
Youcan’taccuratelypredictthefuture
soyoumust
posi>onforthechallenges&opportuni>es