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Iowa land rent shoots past $250/acre mark

Jeff Caldwell 05/07/2012 @ 11:37am Multimedia Editor for Agriculture.com and Successful Farming magazine.

If you think farm land sale prices are high, how does an increase of $38 a year...to rent row crop acres...hit you?

That's what the results of the latest Iowa State University (ISU) Extension land rental rate survey, conducted earlier this year, shows for that state. That adds up to an 18% increase from a year ago, the largest increase since ISU officials have kept track of rental rates 18 years ago, according to ISU Extension ag economist William Edwards. This year's survey of landowners and tenants shows a range of $193 to $279/acre for land rents in Iowa, with an average of $252/acre. That's climbed steadily from $176/acre in 2008

The biggest increase in rent paid came in north-central Iowa, where the rate shot 26% higher over a year ago to $57/acre. South-central Iowa farm land tenants paid just 9%, or $16 more per acre over the previous year.

"High quality land showed the largest increase in rents," Edwards says. "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 respondents indicated that typical rents were $400 to $500 per acre or more for the higher quality land."


chart & map courtesy ISU Extension


Numbers like these are common all around the Corn Belt, where the rising tide of grain market prices has floated all adjacent markets higher, including both land prices and rental rates. Though there are a lot of "sweetheart" deals out there in which a landlord's renting ground for artificially low rates, be it to a family member or friend, farmers say the trend is the same in other key corn- and soybean-growing states.

"Locally, $300 is kind of standard for the competitive parcels that have been known to come up. $350-$400 here in my immediate area will raise some eyebrows, especially multi-year," says Indiana farmer and Agriculture.com Farm Business Talk veteran contributor steeringwheelholder. "Flex leases are coming on fast with base rent of about $200. Rent was about $1 per bushel corn yield for a long time around here, recently it is about $1.50. This ground here will avg 185 corn and 50 bushel beans."

But, though many farmers acknowledge there are "sweetheart" rent arrangements that can sometimes be harmful to one involved party or the other, the bases for a good rent deal haven't changed in this era of climbing rental rates.

"My observation is that those deals often become the swan song for the tenant. At some point the landlord or the heirs look at it and, rightly or wrongly, assume that the tenant was taking advantage and in some cases overreact," says Farm Business Talk advisor hardnox604008. "And in a lot of cases the former tenant isn't even given consideration for future rental."

Adds Farm Business Talk senior contributor smokeyjay: "As always, good advice would be to be proactive and maintain communication with all parties of an agreement to thwart any feelings that someone is taking advantage of a good thing."

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