The upper, dark-shaded area shows the contribution made to breakeven amounts by government payments and small amounts of miscellaneous farm income. Both willingness to pay rent based on next year s expected returns, and ability to pay rent, based on proceeds from last year s crop, probably figure into what tenants offer landlords each fall when they renegotiate rental rates. Figure 11 is an attempt to get at tenants willingness to pay based on expected returns at the time of negotiation. Harvest-time prices are probably the most current price information available at that time. Figure 12 attempts to get at tenants ability to pay by calculating the breakevens based on average prices received for corn and soybeans in the next calendar year.
Many farmers store grain because they believe they can do better than selling at harvest time.
Storage involves additional costs such as shrink- age, interest payments to the government on outstanding loans on the crop, and facility costs. Farmers who store crops probably expect prices to increase in order to cover these added costs but this is a bet that has not paid off over the past couple of years. Cash corn prices were higher than at harvest in seven of the 16 years. As a result, figure 12 s calculated breakeven amounts based on the calendar-year prices are also more volatile. The two main sources of economic returns that a landlord stands to gain from owning cropland are current-year rents and expected future capital gains when the land is sold.