AMES — The latest Iowa State University Extension survey of farmland cash rental rates shows an increase by an average of more than ten percent (10.3) in 2022.
Economist Alejandro Plastina says there still seems to be room for more of an increase based on the price of land and commodities. “Many people ask, ‘why aren’t we seeing an even higher increase in cash rental rates?’ And there are several answers to that question, but mostly, I think is related to the timing of the survey,” Plastina says.
He says the survey is conducted every year in February and April when many rents are already decided — but some are not decided until September and August. He says the question asked about rent is more general. “It’s not about the cash rental rate negotiated between a particular tenant and a landowner. It’s about a typical cash rent in the area,” he says. “It’s different in essence from the U-S-D-A survey.”
The U-S-D-A survey is based on individual contracts. The 256 dollars an acre rate in this survey is the third consecutive increase — and largest uptick in cash rents since 2013 went rates hit 270 dollars. Plastina believes the rate will go up again based on what he’s seeing. “I think that’s the direction we’re I would expect cash rents to go based on the current futures prices, current input costs and land values,” Plastina says.
He says more than half of the farmland in the state is rented to others to farm. And he says the percentage of tenants that are not already landowners is small. “Out of those 53 percent of rented acres, most of them are rented by people who also own their own land and they expand by renting other people’s land,”Plastina says.
That’s because Iowa farmland doesn’t go up for sale very often. He says the competition farmlands can be a once-in-a-lifetime opportunity for current farmers to expand, and they are usually very sought after and people are willing to bid and compete for those farms coming into the market. The average cash rents increased by similar percentages across different types of land quality.
In the north-central Iowa crop reporting district, cash rents went up from $238 to $261 an acre.