Stronger commodity prices and farmland values are leading to higher cash rents across most of the state. According to the most recent annual survey of cash rental rates for the state of Iowa?s farmland, it showed that rates have increased an average of 10.3% in 2022, to $256 per acre. This is the third consecutive and largest uptick in cash rents since 2013, when rents peaked at $270 per acre ? a level 5.5% higher in nominal terms than in 2022. In comparison, nominal corn and soybean prices received by farmers in Iowa declined by 16 and 11%, respectively, since mid-2013.
?Higher cash rents means lower margins on rented land, but current corn and soybean prices should support positive margins for most tenants in 2022,? associate professor in economics and extension economist with Iowa State University Extension and Outreach Alejandro Plastina said. ?Somewhat more concerning is the picture for 2023, with expected higher input costs across the board and stagnant to declining crop prices.?
The survey was based on the responses of farmers, landowners, professional farm managers and realtors, agricultural lenders, and others with knowledge of cash rents for farmland. There were 1,401 responses. The information that was supplied from these responders were typical cash rental rates for high, medium, and low-quality cropland in their counties. They also included what land was devoted to the production of hay, oat, and pasture. There was no information collected about individual farm rents.
As typical for survey data, there was significant variability across counties in year-to-year changes. But rents for land planted to corn and soybeans experienced increases in the average rents for most counties in Iowa. All land qualities have seen their average cash rents increase by similar percentages.
High quality land experienced an 11.2% increase, from $267 per acre in 2021 to $297 in 2022. Medium quality land experienced a 9.4% increase, from $233 per acre in 2021 to $255 in 2022. Low quality land experienced a 10.2% increase, from $197 per acre in 2021 to $217 in 2022.
Survey data can typically lag for the current year due to reporting deadlines. The typical cash rents reported in the survey reflect the economic conditions during the months of July and August of the previous year through February of the current year. To avoid interfering with cash rent negotiations or re-negotiations, this survey has been historically implemented at the same time each year. Plastina said that survey information can serve as a reference point for negotiating an appropriate rental rate for next year. However, rents for individual farms should be based on productivity, ease of farming, fertility, drainage, local price patterns, longevity of the lease, conservation practices, and possible services performed by the tenant.
?The cash rent survey results are based on opinions and should not be used to set prices without proper discussion of the relevant circumstances around an individual farm,? said Plastina.
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