Farmland rental rates increase sharply for 2011
Anyone who is involved with the rental market for Iowa farmland knows that rental rates were pushed significantly higher by the favorable corn and soybean prices that farmers enjoyed in 2007 and early 2008. That was followed by lower prices in late 2008 and 2009, which took much of the steam out of the land market. Prices took off again in fall of 2010 due to tight grain supplies and increased demand worldwide. It didn’t take long for those prices to be reflected in cash rents.
Results from the most recent Iowa State University Extension rental rate survey estimated that the average cash rent for corn and soybean land in the state for 2011 was $214 per acre, an increase of $30 per acre or 16 percent from last year. This is the largest one-year increase since the statewide survey was started in 1994. Even more interesting, though, was the range of typical rents reported. For most counties the lower end of the range was about the same as in 2010, but the high end of the range was as much as $50 to $100 an acre above last year. Remember, the range represents the highest and lowest estimates of typical rents for high, medium and low quality land by respondents who replied for each county. They do not represent rents for individual farms.
Average rents were higher in all nine crop reporting districts, with increases ranging from $23 per acre (12 percent) in east central Iowa to $37 per acre (21 percent) in southwest Iowa. Individual farm rents that were set before the Sept.1, 2010, termination deadline probably changed very little, while rents that were negotiated later likely reflected the higher corn and soybean prices being offered then.
The intent of the Iowa State survey is to report typical rents in force, not the highest or lowest values heard through informal sources. Rental values were estimated by asking over 3,000 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 oats, hay and pasture acres. The number of responses received this year was 1,567, an increase of 25 percent over last year. Of these, 33 percent came from farmers, 24 percent from landowners, 22 percent from professional farm managers, 14 percent from lenders, and 7 percent from other professionals.
The Cash Rental Rates for Iowa 2011 Survey is available online as a downloadable document; from the Ag Decision Maker website and from the ISU Extension online store at http://www.extension.iastate.edu/Publications/FM1851.pdf.
Other resources available 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 analyze leasing questions.
, retired economist.