|Annual survey shows rates increased an average of 9% over previous year
AMES, Iowa – Average cash rents in Iowa are the highest on record, according to the Cash Rental Rates for Iowa 2023 Survey conducted by Iowa State University Extension and Outreach.
The survey shows an increase of 9% in 2023, for a state average of $279 per acre. The new record is 3.3% higher than the previous record set in 2013, when rent was $270 per acre. The increase in rent since 2013 compares to a 2.8% increase in the non-inflation adjusted price of corn, and a 4.4% decrease in the price of soybeans.
Results of the survey are summarized in the May edition of Ag Decision Maker, in an article written by Alejandro Plastina, associate professor in economics and extension economist with ISU Extension and Outreach.
The survey is based on 1,306 usable responses about typical cash rental rates in Iowa counties for land producing corn and soybeans, hay, oats and pasture. Of the responses, 42% came from farmers, 37% from landowners, 9% from professional farm managers and realtors, 7% from agricultural lenders, and 5% from other professions and respondents who chose not to report their status.
Across the state
There was considerable variability across counties in year-to-year changes, as is typical of survey data, but 91 out of the 99 Iowa counties experienced increases in average rents for corn and soybeans. Only Des Moines, Jefferson, Lucas, Muscatine, Van Buren, Wapello, Warren and Woodbury counties saw declines in their overall average cash rents. The complete 2023 summary by county, along with surveys from previous years, can be accessed on Ag Decision Maker.
Average cash rents increased proportionally more for higher quality lands. Low quality land experienced a 6% increase, from $217 per acre in 2022 to $230 in 2023.
Medium quality land saw an 8.6% increase, from $255 per acre in 2022 to $277 in 2023. High quality land saw an 11.1% increase, from $297 per acre in 2022 to $330 in 2023. Corn and soybean yields are provided as a baseline for determining high, medium and low quality acres. These yields, along with five-year average yields for corn and soybeans, are included with the survey results.
Plastina says that survey information can serve as a reference point for negotiating an appropriate rental rate for next year. However, he reminds Iowans that rents for individual farms should be based on productivity, ease of farming, fertility, drainage, local price patterns, longevity of the lease, conservation practices and other factors.
Although rents are at a record high, Plastina notes that farm income projections are expected to decline over the next couple of years, putting downward pressure on cash rents.
However, he says landowners who rent their land will also continue to evaluate their own investment, including their rate of return, cost to maintain their land and the conditions surrounding the farmland market.
Additional resources available for estimating cash rents include the Ag Decision Maker files “Computing a Cropland Cash Rental Rate (C2-20),” “Computing a Pasture Rental Rate (C2-23)” and “Flexible Farm Lease Agreements (C2-21).”
These fact sheets and more are on the Ag Decision Maker Leasing web page and include decision tools (electronic spreadsheets) to help analyze individual leasing situations.
Farm management field specialists can help with general questions about leasing. Also, an online tool is available to visualize the cash rents by land quality in each county by year, and compare trends in cash rents for a county versus its Crop Reporting District and the state average.
In July and August, ISU Extension and Outreach will hold Farmland Leasing and Management Workshops, with additional opportunities to learn more on leasing trends and topics impacting farmland owners and tenants. The Ag Decision Maker events page will post details as the workshop dates approach.