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    Survey shows Iowa land rents up significantly in 2021

    ISU Extension and Outreach
    ISU Extension and Outreach reliable information about agriculture, 4H programs, food and nutrition, and family sciences. ISU Extension and Outreach has an office in Muscatine.

    Muscatine Living

    By Alejandro Plastina–Iowa State University Extension and Outreach

    Data released this spring examines changes in land prices, commodity prices, government assistance, and how each of these factors will affect farm profitability.

    AMES, Iowa – Most farmers in Iowa are seeing a significant increase in what they pay for land rents this year, according to a recent survey conducted by Iowa State University Extension and Outreach.

    According to the “Cash Rental Rates for Iowa 2021 Survey,” which is conducted annually and available in the May Ag Decision Maker, rates have increased an average of 4.5%, an increase of about $10 per acre, for a total per-acre rent of $232.

    Land considered to be “high quality” saw an average of a 3.9% increase, up from $257 per acre in 2020 to $267 in 2021. “Medium quality” land saw a 4.5 percent increase, from $223 per acre in 2020 to $233 in 2021, and “low quality” land is up 4.8%, from $188 per acre in 2020 to $197 in 2021.

    “This is the first substantial increase in cash rents since 2013, when rents peaked and four years of declining rents and three years of relatively stable rents followed,” said Alejandro Plastina, associate professor in economics and extension economist with ISU Extension and Outreach.

    One bright spot for farmers has been a significant increase in commodity prices since late 2020 and into 2021, but Plastina said it’s unlikely crop prices will be high enough to offset the income farmers will lose as recent government payments expire.

    In 2020, about one-third of net farm income was supported by government payments. Much of this came from emergency funding and market disruptions caused by COVID-19.

    “The (USDA) Economic Research Service is projecting a decline in net farm income this year, despite the increase in commodity prices,” Plastina said. “Corn and soybean prices are going up and are very high compared to recent years, but for the whole farming operation, it’s very unlikely that prices will run up high enough to offset the loss of government payments.”

    This month’s Ag Decision Maker also includes an article on “Computing a Cropland Cash Rental Rate,” a decision tool for estimating cash rental rates, and information on flexible farm lease agreements.

    The 2021 cash rent survey is based on 1,363 usable responses from Iowans about typical cash rental rates in their counties for land producing corn and soybeans, hay, oats, and pasture. Of these, 41% came from farmers, 33% from landowners, 11% from professional farm managers and realtors, 9% from agricultural lenders, and 6% from other professions and respondents. Respondents indicated being familiar with a total of 1.5 million cash rented acres across the state.

    As always, Plastina reminds farmers and the industry that the survey uses averages, and is meant to be a reference for decision making – not a blueprint.

    “This survey should be used as a discussion starter and not as a price setter,” he said. “It provides something to share between landowners and tenants as they discuss whether the county averages make sense to them and why, and as indicated in the survey report, they should handle the negotiation in terms of the actual characteristics of the farm.”

    Plastina said he’s hopeful the number of survey participants will increase next year, as the state and country move beyond COVID-19 and return to business as usual. To be included in the survey, send him an email at [email protected].

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