AMES, Iowa – Rental rates for Iowa farmland declined for the fourth consecutive year, according to the results of the 2017 Cash Rental Rates for Iowa Survey conducted by Iowa State University Extension and Outreach.
After 14 consecutive years of rental price increases (2000-2013), prices have now gone down for four straight years. Prices dropped by 4.8 percent in 2017 and have gone down nearly 19 percent in the last four years.
“Cash rents are declining but not as fast as crop prices,” said Alejandro Plastina, assistant professor in economics and extension economist at Iowa State University. “Corn prices dropped by about 60 percent in the last four years and rent has gone down 19 percent. Profitability in cash rented acres will still remain tight.”
Rental rates came to $219 per acre statewide, with a dip in prices shown in all regions but the southeast region. The state average rate was $270 just three years ago. The largest drop in prices came from District 2, a $25 drop in the counties making up the north-central region of the state. Most regions saw decreases of $9 or more.
The highest average cash rent was observed in the District 3 (north-east region) at $241 per acre.
District 8, the south-central region, saw the smallest drop in rental prices but continues to have the lowest rental rate at $180 per acre.
“Even with these overall lower cash rental rates, it will still be hard to squeeze profits out of cash rented acres in 2017,” Plastina said. “Despite some recent anecdotal evidence of firm land values scattered across the state, I wouldn’t expect a generalized increase in cash rental rates any time soon if corn and bean prices remain at current levels.”
Rental values were estimated by asking people familiar with land rental markets what they thought were typical rates in their county. Of the 1,448 responses received, 52 percent came from farm operators, 29 percent from landowners, 9 percent from agricultural lenders, 9 percent from professional farm managers and realtors and 2 percent from other professionals.
The Cash Rental Rates for Iowa – 2017 Survey is available online from the Iowa State Extension Store and Ag Decision Maker.
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), Computing a Pasture Rental Rate (C2-23) and Flexible Farm Lease Agreements (C2-21). All documents include decision file electronic worksheets to help analyze leasing questions.