Rates of Return to Pasture and Cropland Diverge

Aug 21, 2018

By Shannon Sand

The gross rate of return to pasture versus cropland widened in 2018 to a 1.1 percentage point difference compared to 2017. Pasture/rangeland gross rate of return reported in the 2018 survey is 2.4% and for non-irrigated cropland is 3.5% compared to 2017 rates of return at 2.8% for pasture and 3.5% for non-irrigated cropland.

The gross rate of return (gross cash rent as a percent of land value) is used to estimate current rates of return to land. It is calculated from respondent’s reported average cash rental rates and their estimated values of leased land. This is a measure of the gross rate of return obtained by landlords, before deduction of property taxes and other landlord expenses. The 1991 to 2018 trend in the gross cash rent-to-value ratio is depicted in Graph 1.

Graph 1. Gross Rent-to-Value Ratio 1991-2018.

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