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Abstract
This paper examines the rental rates that tenants can afford to pay given
alternative price and yield conditions. Over the last several years, harvest prices
and yields have generally tended to be higher than their expected values when rates
were negotiated with landlords. The benefits have accrued to the tenants if the
farmland rental contract was a fixed, cash rental arrangement. Since the downside
risk in net returns is likely greater than the upside risk, the paper also looks at
alternative share arrangements that minimize the downside risk to tenants and
allow landlords to enjoy an increase in returns if prices move higher than expected.