Home / News / Business news / Farmland rental rate climb slips -- survey

Farmland rental rate climb slips -- survey

Jeff Caldwell 05/13/2013 @ 1:46pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

The last three years have seen farmland rents track fairly closely with values themselves. The trend hasn't bucked from its sharply higher trajectory . . . until now. Does recent data further foreshadow a shift in land values in the coming months?

The annual survey of farmland cash rents for Iowa, released recently by survey manager and Iowa State University Extension ag economist William Edwards, shows the direction of the trend remains intact; however, the climb has slowed in the last 12 months, a shift some experts say could be a sign that the market is turning. Either way, Edwards says the drought and resulting anxieties about crop prospects and profitability moving forward definitely took a bite out of the rent climb.

"Results from the most recent survey of farmland rental rates carried out by Iowa State University (ISU) Extension and Outreach showed that the average estimated cash rent for corn and soybean land in the state for 2013 was $270 per acre, an increase of $18 per acre or 7% from last year," Edwards says of the results of this year's survey, which was conducted with farmers, landowners, farm managers, and ag lenders. "This compares to increases of 16% in 2011 and 18% in 2012. Lower crop yields due to prolonged dry weather and lower price forecasts for the 2013 crop have tempered the optimism about prospective profits."

Land's corn suitability rating (CSR) remains a key variable for the ISU survey, but there are a lot of personal variables that go into every land rent agreement -- more so, likely, than in land sales -- and that makes reaching a number for average rents a moving target, farmers say.

"It's hard to know how much credence to give a report like this. It's probably a small sample. It's voluntary so that restricts it even more -- some would not tell the other side of their own face what they pay in rent and some will make up any number they like," says Agriculture.com Farm Business Talk veteran adviser Jim Meade / Iowa City. "On the whole, it's probably not too far off for approximation work."

Many of the personal elements of a land rental agreement can cause prices to range much wider, other farmers say. Sometimes it comes from existing personal relationships, and sometimes it's a matter of history.

"In my district in northern Iowa, the really good stuff is cash-renting for around $6 per CSR point, with the lower-quality land going for a $5- to $5.50-per-CSR-point range," says Farm Business Talk senior contributor rswfarms. "But again, you have a huge range. Part of the reason for the huge range in cash rent can be due to some very, very, large lack of current knowledge with some Iowa landowners. I know of two cases where you have two very old lady landowners in the 85 to 93 age range that are cash-renting their land out for only $140 to $160 per acre. This was what their husbands rented the land out for 12 to 15 years ago, and then the husbands died, and their wives just kept the cash rent at what the husbands decided 15 years ago."


CancelPost Comment
MORE FROM JEFF CALDWELL more +

Will you plant corn late? Here are 5 tips to… By: 04/23/2014 @ 11:59am There's mounting evidence to support the idea that this spring might be a repeat of last…

Corn Planting Slumps Forward -- USDA By: 04/22/2014 @ 8:13am Corn planting remains behind the normal pace, though a weather window may be opening this week to…

Drought Cuts Southern California Water… By: 04/21/2014 @ 2:53pm The drought is bad in the nation's center. Crops are hurting, and there's a lot of…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Farm Bill 2014 Timeline