It's no longer feasible for next generation farmers to grow through expansion of cash-rented acres, according to University of Illinois ag economists Gary Schnitkey and Nick Paulson. Their latest analysis of 2026 crop budgets reveals that rented farmland is operating at a loss, especially under current price and cost scenarios.

With corn prices projected near $4.00/bu and soybeans at $10.50/bu, the economics simply don't support the historic model of scaling through acreage alone. The Illinois 2025 average cash rent sits at $264/acre, but high input costs have erased potential returns.

"We've seen cash rents and non-land costs rise since 2022," Schnitkey explained during a webinar hosted by the Illinois Soybean Association. "We don't expect significant cost declines in the near future. Break-even levels are well above current market prices."

While ad hoc federal payments have helped cover some operational gaps, Paulson and Schnitkey stress they're not enough. On a typical 50/50 corn-soybean rotation, University of Illinois 2026 crop budgets show the stark contrast between owned and rented ground:

2026 Crop Budget - Central Illinois (50% corn, 50% soybeans)

Source: University of Illinois

Young and beginning farmers are especially at risk. Without a base of owned land or off-farm income, they struggle to compete against established operators who can cross-subsidize losses with equity from owned ground.

"We need to re-evaluate every rented acre," Paulson urges. "The days of assuming land expansion guarantees returns are gone. The data simply doesn't support it anymore."

He notes that average returns on rented land in 2026 are projected at -$32/acre, far from the long-term average of $100/acre for Central Illinois. Despite these red numbers, cash rent declines have been minimal. Illinois, Indiana, and Iowa are all reporting 2025 average rents above $225/acre.

Schnitkey warns: "It's tough to let land go, but it might be necessary. We need to ask ourselves: are we farming to grow or just to survive?"

Rethinking Growth Strategies

With limited return potential from row crops, the economists urge next gen farmers to explore alternative revenue streams:

• On-farm businesses (seed sales, custom farming, agritourism)

• Decommoditized crops (organic, non-GMO, specialty grains)

• Branded products or direct-to-consumer sales

• Off-farm income with health benefits

"Non-farm income is more stable than farm income," Schnitkey explains. "It's becoming a necessary part of the financial picture, especially for beginning farmers."

According to 2024 data from Illinois Farm Business Farm Management, living expenses exceeded net farm income, further eroding farm equity. Without strong outside income, young farmers are struggling to build assets.

Paulson concludes: "You need a six-figure off-farm household income and some form of cash-generating enterprise on the farm. That's the new growth model for the next generation."