Iowa Ag Connection - Iowa Farm Rent Rates Decline, But Not as Much as Commodities

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Iowa Farm Rent Rates Decline, But Not as Much as Commodities
Iowa Ag Connection - 05/23/2019

Cash rental rates for Iowa farmland are down 1.4% compared to last year, but are still higher than in 2011, despite significant decreases in crop prices.

handshake between farmers in soybean field by PointImages/stock.adobe.com.According to Iowa State University Extension and Outreach's "Cash Rental Rates for Iowa 2019 Survey," (FM 1851) published in the May Ag Decision Maker newsletter, the average cash rent per acre is $219, down from $222 per acre last year.

Meanwhile, corn and soybean prices have dropped 50% and 45%, respectively, since mid-2013, according to Alejandro Plastina, assistant professor and extension economist at Iowa State.

"Cash rents declined slightly in 2019 but won't offset lower prices for farmers who are renting land," said Plastina. "It will be tough to break even with these cash rents if you are renting land."

Cash rents have only dropped about 19% since the historic high of $270 per acre, in 2013, but the decline is in line with the cumulative 16.7% decline in land values since 2013.

The survey is based on 1,262 responses across the state for cash rent prices received to grow corn, soybeans, hay, oats and pasture. The rate of change varied by county and by region, with 65 counties experiencing a decline in the average rent for corn and soybeans.

The 2019 survey showed a range from a 3.4% increase in southeast Iowa (District 9), to a 2.7% drop in north central Iowa (District 2). The lowest rents are in the south central counties, where most averages are below $200 an acre.

Plastina said the survey can serve as a reference point for negotiating rental rates, but should not be blindly used in leasing contracts.

"These are averages so I always say that they should not be used as off-the-shelf truths to avoid negotiations between tenants and landowners," Plastina said. "Both parties have to figure out what actually works for them in terms of the land quality, historic yields, what kind of improvements are being made to the land and other factors unique to their situation."

Other articles in this month's Ag Decision Maker include a look at farm stress and marriage, called "Keys when 'married' to farm stress," by Larry Tranel, dairy specialist with ISU Extension and Outreach.

The newsletter also includes information for farmers who want to compute their own cropland rental rates, as well as the publications "Livestock Enterprise Budgets for Iowa," and "Financial Performance Measures for Iowa Farms."

More resources on rental agreements can be found on the Ag Decision Maker leasing page at www.extension.iastate.edu/agdm/wdleasing.html.

Farmland leasing meetings are being scheduled for July and August across the state for in-person discussions for landowners and tenants on leasing trends and issues that impact renting Iowa farmland.

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