Farmers considering whether to rent or buy farmland can use the cash rent equivalent (CRE) calculation to help inform their decision. The CRE compares the cost of owning land, including loan payments and real estate taxes, with the cost of renting similar acreage.
The calculation involves adding up annual land loan payments and real estate taxes, then dividing by the total number of acres owned. This figure provides a per-acre ownership cost that can be compared directly with local rental rates.
For example, a farmer who owns 500 acres—400 paid off and 100 under financing—may have an annual ownership cost of $40,000, resulting in a CRE of $80 per acre. If this farmer considers buying another 100 acres for an additional $39,000 annually (including taxes), the new CRE would rise to $131.66 per acre across all owned land.
If local rents are higher than this new CRE, purchasing may be financially beneficial. Conversely, if rents are lower, continuing to rent could make more sense. The CRE does not include other operating costs such as labor or equipment expenses.
Farmer’s Business Network (FBN) offers educational resources on these decisions and provides financial products tailored for agricultural operations. Farmers interested in purchasing land can explore FBN Finance’s loan options or consider operating lines for rental costs and operational needs. According to the official website, FBN aims to enhance farming by increasing access to information and competitive choices for producers through its online platform at https://www.fbn.com/.
The company operates as an agricultural network focused on improving market access and insights for farmers. It also runs an online marketplace offering clear pricing and direct delivery of agricultural goods to farms. Membership gives growers tools for data-informed decisions about seed selection and pest management while allowing them to exchange insights anonymously.
FBN was founded in 2014 by Charles Baron and Amol Deshpande and is headquartered in San Carlos, California at 388 El Camino Real (https://www.fbn.com/). Diego Casanello serves as chief executive officer (https://www.fbn.com/).
Farmers seeking further advice can contact FBN Finance advisors or review related guides on renting versus buying farmland.
