The cropland rental market in Iowa has taken another jump in rental rates. "Cash rent for cropland has increased significantly in 2008, driven by the sharply higher corn and soybean prices of the past two years," says William Edwards, Iowa State University Extension economist. "Rent for cropland in Iowa this year is up an average of 18% over 2007."
Results from an Iowa State University Extension survey taken this spring were released recently. The survey indicates that the average cash rent for corn and soybean land in the state for 2008 is $177 per acre, compared to $150 in the 2007 survey. This is the largest increase in a single year since the statewide survey was initiated in 1994, he says.
Average tops $200 per acre in many counties
All of the 12 areas in Iowa showed increases, ranging from $18 to $32 per acre. Average estimates exceeded $200 per acre in many counties.
The intent of the ISU survey is to report typical rents in force for 2008, not the highest or lowest values heard through informal sources, says Edwards. Rental values were estimated by asking over 1,000 tenants, landowners, farm managers, lenders and other people familiar with the land market what they thought were typical rates in their county for high-, medium- and low-quality row cropland, as well as for hay and pasture acres.
Opinions about rental rates varied widely in this year's survey, even within counties. That indicates a great deal of uncertainty this year, notes Edwards.
Soaring grain prices are big factor
The most positive factor affecting rents has been higher grain prices, especially for corn. Consistently good yields in recent years have also lent support. On the negative side, escalating costs for fuel, fertilizer, seed, pesticides and machinery have offset some of the higher revenues. Wet, cool weather and flooding in Iowa may dampen competition for rented land for 2009.
The latest survey also presents typical dollars of rent being paid per bushel of corn and soybean yield for each county, based on the county average yield for each crop during the last five years. This year the rent per bushel ranged from $1.00 to $1.20 for corn and from $3.35 to $4.24 for soybeans across the 12 areas. The average rental rate per point of corn suitability rating was also estimated, and ranged from $2.15 to $2.50 for most counties.
These values are useful for adjusting rental rates for higher- or lower-than- average productivity levels on individual farms, he notes.
How do you figure a fair cash rent?
Survey results are intended to be used as guidelines only. Edwards says the appropriate rent for an individual farm should take into account factors such as fertility levels, drainage, USDA program parameters, size and shape of fields, existence of seed production or manure application contracts, local grain prices, and other services provided by the tenant.
What is a fair rent to pay for corn and soybean land in Iowa? There are resources to help you figure that, says Edwards. Those resources include ISU's Ag Decision Maker information file C2-20, "Computing a Cropland Cash Rental Rate," and file C2-21, "Flexible Farm Lease Agreements." Both of these include decision file electronic worksheets to help analyze leasing questions.
ISU's Ag Decision Maker Web site is at www.extension.iastate.edu/agdm. Look under "leasing."
ISU Extension conducts a series of farmland leasing meetings across the state for landowners and tenants each summer. ISU farm management specialists explain the various types of leases and how to determine a fair rent. These meetings will be held in July and August. Contact your county Extension office to find the date when the nearest meeting to you will be held. The dates and locations are also posted on ISU's Ag Decision Maker Web site.