Impact of Alternative Land Rental Agreements On the Profitability of Cotton Producers Across the Cotton Belt

Across the Cotton Belt, cropland values increased, decreased or remained constant, depending on the state, from 2007 to 2011. The average change in cropland values in the Cotton Belt from 2010 to 2011 was 3.6%, modest when compared to increases in the Corn Belt. However, even modest increases in land values translate into rising production costs for producers, either through increased ownership costs or increased rents. With approximately 40% of farmland being rented nationally, land values and methods of securing land are important to overall profitability of cotton operations. The objective of this research was to evaluate the impact of land values on cotton producer profitability across the Cotton Belt considering alternative methods of securing land and production systems. A cotton production financial simulation model was constructed to evaluate the impact of alternative methods of securing land, considering variable prices and yield, on grower net returns above variable costs considering conventional tillage and conservation tillage systems. Data were gathered from cotton enterprise budgets and historic prices, yields, land values, and rents for Arkansas, Georgia, and Texas.