Anyone involved in the rental market for Iowa farmland knows rental rates have been pushed significantly higher by the favorable corn and soybean prices farmers have enjoyed since 2010. This trend is continuing in 2012.
Each spring, Iowa State University Extension farm economist William Edwards and his assistant, Ann Johanns, conduct a statewide survey of cash rents. The results of the 2012 survey were announced May 3.
The rental rate survey estimated the 2012 average cash rent for Iowa corn and soybean land at $252 per acre, an increase of $38 per acre or 18% from last year. This is the largest one-year increase since the statewide survey was started in 1994. The second largest increase was in 2011, with an increase of $30 per acre.
18% rise for 2012 is largest one-year increase since survey began
Average cash rents were higher in all nine crop reporting districts in Iowa in 2012. Increases range from $57 per acre (26%) in north central Iowa to $16 per acre (9%) in south central Iowa.
High quality land showed the largest increase in cash rent. Estimated rents for land in the high third of each county increased by an average of 20%, but estimated rents on low third quality row crop land increased by only 15%. In many counties the survey respondents indicated that typical rents were $400 to $500 per acre or more for the higher quality land.
Typical rental rates for land growing oats and hay were also reported, as well as rental rates for grazing pasture and corn stalks. This year rental rates for allowing hunters on farmland were also included in the survey.
Help is available to assist in figuring a fair cash rental rate
The intent of this annual ISU survey is to report typical rents that are currently being paid, not the highest nor the lowest values heard through informal sources.
Rental values reported in the ISU survey were estimated by asking over 3,000 people familiar with the land market what they thought typical rates were in their county. Number of responses received this year was 1,419. Of the total responses, 37% came from farmers, 28% from landowners, 16% from professional farm managers, 16% from lenders and 3% from other professionals.
The Cash Rental Rates for Iowa 2012 Survey is available online as a downloadable document. It's on the ISU Ag Decision Maker website at www.extension.iastate.edu/agdm/. Other resources for estimating a fair cash rental rate include the Ag Decision Maker information files Computing a Cropland Cash Rental Rate (C2-20) and Flexible Farm Lease Agreements (C2-21). Both documents include decision file electronic worksheets to help you analyze leasing questions.
William Edwards is an Iowa State University professor of economics with extension responsibilities in farm business management. He can be contacted at 515-294-6161 or by email [email protected]. Ann Johanns is an Extension program specialist in ag economics. She can be reached at 641-732-5574 or [email protected].