Cash rental rates in Iowa declined $10 per acre on average in 2014, representing the state's first drop in cash rental rates in 15 years, according to data released this spring by Iowa State University Extension.
"This 4% drop is close to the decline in Iowa farmland values over the past 12 months reported in surveys by the Iowa Realtors Land Institute," says William Edwards, survey coordinator and retired agricultural economist at Iowa State University.
The decline means landowners are receiving about $260 per acre this year, compared to $270 last year.
While eight of Iowa's nine crop reporting districts showed a decrease, only the southeast district showed no change from 2013 to 2014.
"Average rents were lower in all nine crop reporting districts except for the southeast district, which showed no change," Edwards says. "The largest decrease was in north central Iowa, $24 per acre, where a wet spring last year reduced yields and prevented some acres from being planted. Grundy County had the highest average rent in the state, $330 per acre."
Iowans who were surveyed in March supplied nearly 1,700 responses regarding typical cash rental rates in their counties for land producing corn and soybeans, as well as hay, oats and pasture. Of these responses, 50% came from farm operators, 25% from landowners, 15% from ag lenders, 7% from professional farm managers and 3% from other ag professionals.
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ISU estimates that the primary reason for the drop in cash rental rates is the decline in crop prices. The estimated gross revenue per acre of corn in 2013 was more than $200 less than was realized in 2011 and 2012, and about $60 per acre less for soybeans.
The survey also collected information on cash rents for oat, hay and pasture ground, finding established alfalfa fields renting for $191 per acre on average; grass fields $143; and oat fields for $175.
Typical rental rates per bushel of corn yield, soybean yield and CSR point are computed for each county and displayed as a chart in the publication.
In Illinois, professional farm managers surveyed in August, 2013, also expected a decline in 2014 cash rents for professionally managed land. Excellent to good land, they estimated, would fetch $14 less in 2014 when compared to 2013, equating to a 4% change. They expected a 5% decline in values for average to fair land, as reported by the University of Illinois Farmdoc.
As of March, 2014, the Illinois Society of Professional Farm Managers and Rural Appraisers' outlook on cash rents hadn't changed. A survey presented at the group's Land Values conference offered a mid-range estimate of $375 per acre for the highest quality land.
Indiana's Mike Boehlje, a Purdue University ag economist, also expected a decline in the Hoosier state. Boehlje told Indiana Prairie Farmer's Tom Bechman in January that with lower crop prices, farmers paying $500 or more per acre cash rent could be in a pinch when it comes to covering costs and making a profit.
Meanwhile, Ron Plain, University of Missouri Extension agricultural economist, last week advised the state's farmers to renegotiate cash rents on lower crop prices and higher inputs.
"Corn averaged above $6 a bushel for three years in a row, but it is not there anymore," Plain said in an MU statement, explaining that corn prices are likely to remain in the $4 to $5 range for next few years.
"You take a look at seed costs, fertilizer costs. They've gone up a great deal over the last several years," Plain says. "That trims the margin for the tenant and what is available to pay cash rent."