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Iowa farmland cash rental rates jump

Agriculture.com Staff 02/11/2016 @ 7:04am

Cash rental rates for Iowa farmland have been pushed upward by the sharply higher corn and soybean prices that producers have been seeing since last fall.

Results from an Iowa State University (ISU) Extension survey estimate that the average cash rent for corn and soybean land in the state for 2007 is $150 per acre, compared to $137 in the 2006 survey. This is the largest increase in a single year since the statewide survey was initiated in 1994. All 12 areas surveyed showed increases, ranging from $11 to $22 per acre.

William Edwards, ISU Extension economist and author of the survey, says the intent of the ISU survey is to report average rents in force for 2007, not the highest or lowest values heard through informal sources or expected rental rates for next year.

"Rental values were estimated by asking more than 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 crop land, as well as for hay and pasture acres. Opinions about rental rates varied widely, even within counties, indicating a great deal of uncertainty this year," Edwards says in a university report.

Edwards says the surge in grain prices began after the September 1, 2006, deadline for terminating or revising lease contracts. "Therefore, many rents for 2007 reflect expectations of market prices below current levels. Other lease contracts were negotiated later in the fall or winter, usually at higher levels," Edwards says. "Some tenants and owners have entered into flexible lease agreements in which the actual rent will not be determined until the crop is harvested."

The most positive factor affecting rents has been higher grain prices, especially for corn. "Consistently good yields in recent years have also lent support," Edwards says. "On the negative side, escalating costs for fuel, fertilizer, seed, pesticides and machinery have offset some of the higher revenues."

Edwards urges landowners and tenants to remember that survey results are intended to be used only as guidelines. He 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.

Cash rental rates for Iowa farmland have been pushed upward by the sharply higher corn and soybean prices that producers have been seeing since last fall.

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