Rental spreads for share versus cash leases in Ilinois
2002
Barry, Peter J. | Escalante, Cesar L. | Moss, LeeAnn E.
This study utilizes an expected utility framework to conceptualize the risk-adjusted valuation of cash versus share leases for farmers and landowners. Farm-level data then are used to empirically estimate the rental spread between these leases in Illinois, and to econometrically evaluate how these spreads are related to risks and other farm characteristics. The results indicate that non-risk factors likely are the primary determinants of the magnitude and sign of the rental spread. In particular, high cash rent may be a bidding strategy to control additional leased acreage and thus expand farm size.
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