Whole Farm > Land Values > Corn Suitability Ratings

Understanding Iowa Corn Suitability Ratings (CSR)

File C2-86
Written June, 2010

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Figure 1The productivity of Iowa soils for corn and soybean production is quite variable. As shown in Figure 1, Iowa is home to a variety of major soil resources. However, the variability is not just regional. Soil types and their corresponding productivity can change within a matter of feet.  Because soil productivity is variable, the value of land, either for sale or for rent, is also variable. To adequately establish an economic value for a tract of land, its productivity must be taken into account. The Corn Suitability Rating (CSR) is a resource available for measuring soil productivity in Iowa. 

Corn Suitability Rating (CSR) is an index that rates soil types based on their productivity for row-crop production. CSR values can range from a high of 100 to a low of 5 index points per acre. 

The CSR assumes:

  • Adequate management – Variations in the management ability of the farm operator will impact the row-crop yields in a field. To adequately assess the variations in productivity across a wide range of soil types, the same level of management ability must be assumed across the entire tract.
  • Natural weather conditions (no irrigation) – Although changing weather conditions will impact yields in the short-term, the CSRs were computed assuming average weather over a long time period.
  • Artificial drainage where required – The CSR of a poorly drained or very poorly drained soil that does not have adequate drainage is approximately one-half of the CSR of the soil when it is adequately drained.
  • Soils lower on the landscape are not affected by frequent floods.
  • No land leveling or terracing.

Changes in any of these factors will impact the row-crop yield potential of a tract of land. 

Corn is the logical row crop on which to establish productivity.  Each year approximately 80 percent or more of Iowa’s cropland is planted to corn and soybeans. Of this acreage, more than 50 percent is corn. Since the introduction of hybrid corn seed on a wide scale in the 1930s, research has been conducted at Iowa State University to study the relationship among soil properties, weather, and corn yields. These investigations have been carried out on major soils in Iowa under varying weather conditions at outlying research centers, on farmers’ fields, and on industry plots. This research provides a long-term and detailed database concerning corn yields.

However, corn yields themselves are not adequate to measure productivity.  Crop yields change from year to year due to local weather and other conditions. They also change over time due to new and improved crop varieties, changes in tillage methods, improvements in artificial drainage techniques, improved fertilization and other technological changes.  CSR is based on the inherent productivity of the soil, making it relatively constant over time.

Using Soil Maps to Compute CSR

Detailed soil maps have been created for the land in every Iowa county. An example of a typical soil map is shown in Figure 2. The map is an aerial view of the land with lines that distinguish the boundaries between various soil types. The shaded area at the bottom identifies a specific 80 acre tract of land. The 80 acre tract is called your area of interest (AOI).  Each soil type is identified with a number. For example, you can see numbers 107, 138B, 55, etc.

Figure 2
Map Scale: 1 inch = 1,320 feet
Source: Corn Suitability Ratings — An Index to Soil Productivity, PM 1168, Reviewed August, 2009.

These numbers correspond to specific soil types as shown in Table 1. For example, 107 is a Webster Clay Loam soil type, 55 is a Nicollet Loam and 138B is a Clarion Loam.

Table 1

In addition to specifying the soil type, these numbers contain symbols that reveal characteristics of the soil type. For example, capital letters (or the absence of) identify the amount of topographical slope of the land. The various symbols for slope are shown below.

Slope Symbols

  • Blank = 0 to 2 percent or 1 to 3 percent
  • B = 2 to 5 percent
  • C = 5 to 9 percent
  • D = 9 to 14 percent
  • E = 14 to 18 percent

For example, soil type 62D is a Storden Loam that has 9 to 14 percent slope. This compares to 62E that is also a Storden Loam but has 14 to 18 percent slope. As shown in Table 2, the Storden Loam with the steeper slope has a lower CSR (35) than the Storden Loam with the more moderate slope (45). 

Another symbol is the erosion class. The erosion class refers to the thickness of the topsoil (A horizon) present at the time the field was mapped. The erosion symbols are shown below. For example, 138C2 is Clarion Loam with 5 to 9 percent slopes and moderate erosion. Once again, the CSR values are different based on the erosion class.

Erosion symbols

1 = None or slight – More than 7 inches of A or A plus E horizon remaining.

2 = Moderately eroded – Three to 7 inches of A or A plus E horizon remaining. Some of the AB and B horizons are mixed with the surface layer in those soils that have been tilled.

3 = Severely eroded – Less than 3 inches of A or A plus E horizon remaining. Most of the surface layer consists of the AB and/or B horizons in those soils that have been tilled, causing the surface to be much lighter in color.

+ = Overwash – 8-18” of recently deposited material above a pre-existing A-horizon

The weighted average CSR for the 80 acre tract of land identified in Figure 1 is shown in Table 2.  Every soil type in the 80 acre tract is listed in the table. Each is identified by its soil number (Map Unit symbol) and soil name (Map Unit name). The corresponding CSR for each soil type is listed along with the number of acres (acres in AOI) of the soil type that are contained in the 80 acre tract.

Table 2

To accurately identify the productivity of this tract, we compute the weighted average CSR. This is done by computing the total CSR index points for each soil type. For example, the total index points for Nicollet Loam is 531 (90 CSR index points per acre multiplied by 5.9 acres equals 531 total CSR index points). Next, the ratings for each soil type are added together (6,016 CSR index points). The average CSR per acre is 75.2 and is computed by dividing the total index points by the number of acres (6,016 index points divided by 80 acres equals 75.2 CSR index points per acre). 

The weighted average CSR is a more accurate indicator of productivity than the simple average CSR.  The weighted average takes the size of the acreage of each soil type into account while the simple average does not. For example, the simple average of the nine soil types in Table 2 is a CSR value of 65.

Setting Cash Rent Based on Corn Suitability Rating

The corn suitability rating is a useful tool for helping establish a cash rental rate for a tract of land. It is based on the premise that a high CSR means high land productivity for row crop production, which means high yields that generate large revenues.  Land with a high CSR value should have a higher rental rate than land with a low CSR value. 

There are factors, in addition to CSR, that impact the variability in rental rates. Tenants in some areas may be more aggressive when bidding on land. Access to specialty grain markets will impact rental rates.  Whether drainage is in the form of surface waterways or pattern tiling may be another factor. CSR is only one of several factors you should consider when setting a rental rate for crop land. However, CSR should not be overlooked as an important indicator of the inherent productivity of farmland for row crop production. 

Each year Iowa State University Extension conducts a survey of cropland cash rental rates for each county in Iowa. A sample of the data that is collected and summarized is shown in Table 3.  An overall average rental rate is computed for each county along with rental rates for high, medium, and low grade cropland. Knowing your CSR and comparing it to the county average CSR helps determine if your land is in the average, above average or below average category for your county.

More specifically, CSR can be used to compute the actual rental rate for a tract of land. A rental rate per CSR index point is given for each county as shown in Table 3. This is computed by dividing the average rental rate by the average cropland CSR for the county. For example, the rental rate per CSR index point for Clay County is $2.40 ($175 divided by 73 equals $2.40). If the weighted average CSR for your Clay County farm is 82, the cash rent is $197 ($2.40 x 82 = $197). Conversely, a CSR of 65 yields a rental rate of $156 ($2.40 x 65 = $156). The rental rate per CSR index point changes over time, so be sure to use the current rental rate survey (http://www.extension.iastate.edu/agdm/wholefarm/pdf/c2-10.pdf).

Table 3
Source: 2010 Cash Rental Rates for Iowa Survey.

The average cropland CSR for every county in Iowa is shown in Figure 3. These estimates are for the cropland in the county, not all of the land as shown in Figure 4. When farmland is purchased, the purchase includes all of the land (cropland and non-cropland) in the tract. When land is cash rented, it usually only includes the cropland in the tract.

Although the procedure above provides rough estimates of rental rates based on CSRs, a more precise method is to use actual tracts of land being rented in your neighborhood. For example, assume the following three rental tracts are located in your neighborhood.

Table

If the average CSR for your farm is 75, then the estimated rental price is $206 (75 X $2.75).

Figure 3

Computing the Sale Value of Farmland

The corn suitability rating can be a useful tool for helping establish a sale value for a tract of land. It is based on the premise that a high CSR means high land productivity for row crop production, which means high yields that generate larger revenues. Land with a high CSR value should have a higher sale value for row crop production than land with a low CSR value. 

There are factors, in addition to CSR, that impact the variability in sale values. Prospective buyers in some areas may be more aggressive when bidding on land. Access to specialty grain markets will impact sale value as well as competition for urban development. Other factors include timing, size of the tract, ease of access, location and improvements. CSR is only one of several factors you should consider that impact the sale value of land. Regardless, CSR should not be overlooked as an important indicator of the inherent productivity of farmland for row crop production. 

Procedures similar to those used to determining rental values can be used to estimate the sale value of farmland. Dividing the county average market value for farmland by the county average CSR provides an initial estimate of farmland value based on its productivity. For example, if the current county average farmland sale value is $5,000 per acre and the county average CSR rating is 70 index points, then the sale value per CSR index point is $71.43.  If your tract of land has a CSR rating of 80, then the estimated sale value is $5,714 per acre ($71.43 x 80). If your tract of land has a CSR rating of 60, then the estimated sale value is $4,286 per acre ($71.43 x 60).  

The average CSRs for every county in Iowa are shown in Figure 4. These averages reflect all land in the county, not just the cropland as shown in Figure 3. When farmland is purchased, the purchase includes total land (cropland and non-cropland) in the tract. When land is cash rented, it usually only includes the cropland in the tract.

Figure 4
Source: http://www.extension.iastate.edu/soils

A more precise method is to use actual tracts of land that have sold in your neighborhood. For example, assume the following three sale tracts are located in your neighborhood.

Table

If the average CSR for your farm is 82, then the estimated sale price is $5,882 (82 x $71.74). During this process you may also want to adjust the sales for timing. For example, if tracts one and three were sold last month but tract two was sold last year, you may want to adjust it based on the trend in land value over the past year.

Whenever farmland is sold for row-crop production, there is usually a difference between the number of acres used for crop production and the total number of acres. For example, a portion of the land may be used for pasture or wood lots. Even the presence of roads will divert some land from row-crop production. If 160 acres is being sold, of which 150 acres is row-crop land that has a value of $5,000 per acre, the estimated sale value is $4,687 per total acre ($5,000 x 150/160 = $4,687). Also, the sale value may be further adjusted due to the presence of fences, the condition of tile lines and other factors that may impact its value. 

The sale value per CSR index point is also used to track the trends in farmland sale values over a period of years. For example, computing the average sale value per CSR point in a geographic area for each year over the last ten years provides a good estimate of land value trends. It is more accurate than simply computing the average sale value per acre because the average sale value per year does not take into account the difference in the productivity of the land that was sold each year.

Equalization of Tax Assessment 1/

The Code of Iowa requires that farmland assessments be based on net earning capacity and productivity. It allows for the calculation of an average productivity on a county-by-county basis and the use of soil maps and CSRs for the equalization on an ownership tract basis. The procedure is outlined below.

1) First, the county is considered as one large unit and an average productivity value per acre is calculated for the county using the “landlord net income” method shown below.

landlord net income per acre
divided by the capitalization rate
equals the average productivity
value per acre for the county

For example, assume a county has an estimated landlord net income of $63.00 per acre. This value is based on a five-year average of annual Iowa Crop and Livestock Reporting Service census data for cropland acreages, yields, estimated prices of farm products and landlord expenses. Assuming a 7 percent capitalization rate, the average productivity value is $900 per acre as shown below.

$63.00 / 0.07 = $900.00

On this basis each county in the state is assigned a productivity value.

2) Next, the productivity value is used to calculate the total assessed value of taxable farmland in the county. For example, assuming a county with 340,000 acres of taxable farmland and an average productivity value of farmland of $900 per acre, the total assessed value is $306 million.

3) Then, the total CSR index points for the taxable farmland in the county is determined by summing the CSR points for each ownership tract.

4) Next, the total assessed value of taxable land is divided by the total CSR points. This determines the average dollar value per CSR point. For example, assume the total CSR index points for the county are 23,800,000. Dividing this value into the total assessed value of $306 million yields an average dollar value of $12.86 for each CSR index point.

5) Finally, the average CSR per ownership tract (some county assessors use 40-acre tracts or portions thereof based on ownership) is multiplied by the value of each CSR point. For example, assume an 80 acre field with an average CSR of 75.2. This average CSR value, multiplied by $12.86, yields an equalized assessed value of $967.07 per acre. The total assessed value of the 80-acre field is $77,365.60.

This procedure eliminates the impact of a farmer’s management skills on the assessment of the productivity of his/her farmland. Instead, soil maps and CSRs provide the tools to evaluate soil properties and characteristics below the ground surface. This method provides for equalization of assessment on soil productivity, not how well or how poorly one is able to apply management skills.

Remember that the assessed value has no correlation to the actual value of the land.  Also there is no correlation between the change in the value of the land over time and a change in its assessed value.

References:

1/ Corn Suitability Ratings - An Index to Soil Productivity, PM 1168, Reviewed August, 2009.

 

Don Hofstrand, retired extension value added agriculture specialist, agdm@iastate.edu