Stronger commodity prices and farmland values are leading to higher cash rents across most of Iowa. The most recent annual survey of cash rental rates for Iowa farmland showed that rates 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,” said Alejandro Plastina, associate professor in economics and Extension economist with Iowa State University Extension and Outreach. “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 1,401 responses from farmers, landowners, professional farm managers and real estate agents, agricultural lenders and others with knowledge of cash rents for farmland.
They supplied information based on their best judgments about typical cash rental rates for high, medium and low quality cropland in their counties, as well as for land devoted to production of hay, oat and pasture. Information about rents for individual farms was not collected.
There was considerable variability across counties in year-to-year changes, as is typical of survey data, but most Iowa counties experienced increases in average rents for land planted to corn and soybeans.
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.
Due to reporting deadlines, survey data typically lags the current year. 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. The survey has historically been implemented at the same time each year to avoid interfering with cash rent negotiations or re-negotiations.
Survey information can serve as a reference point for negotiating an appropriate rental rate for next year, said Plastina. 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.
