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Iowa cash rent rates decline for fourth straight year

The 2017 Cash Rental Rates for Iowa Survey conducted by Iowa State University has revealed rental rates for Iowa farmland has declined for the fourth consecutive year.

Rental prices increased from 2000-2013, but 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.

Plastina explained that 60 percent of corn prices has dropped in the last four years. “Profitability in cash rented acres will still remain tight.”

The state average rental rate was $270 three years ago, but this year it came to $219 per acre.

The highest average cash rent was observed in North-East Iowa at $241 per acre. South-central Iowa, 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.”
 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.

 

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