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Farm land rental rates not making much movement

Ag/Outdoor

February 14th, 2014 by Ric Hanson

An Iowa State University Extension farm management specialist says farm land rental rates look to be either holding steady or showing some decline. Melissa O’Rourke says landowners and farmers are now negotiating terms for the upcoming crop year and she often hears of cases where rates were too low because a tenant and landlord had entered a long-term lease agreement.

“I had one, I mean I about fell off my chair, when they told me that the producer had been paying 69 dollars-an-acre in cash rent. Another one who came in and said they had been paying 125 an acre in cash rent. A family situation where they were paying 100 dollars an acre cash rent….you know those kinds of cash rents were not keeping up at all with what the expected level should be,” O’Rourke says. She says it’s more important this year to look at the conditions when determining the rent.

“This next year we’re looking at much closer margins, we don’t have the commodity prices we have had in recent years, and for 2014 and maybe a few years looking ahead we’re looking at a much, much tighter situation,”O’Rourke says. “And so, everybody has to sit down, have good communication.” O’Rourke suggest you do some online research to help you with setting rents.

She recommends you go to the Iowa State University Ag Decision maker and look at their research on estimated crop costs and projected budgets. “We’re giving you an idea of what does it cost a producer to put a crop in, and then you can think about what’s a reasonable cash rent based on some projected commodity prices out there,” O’Rourke says. O’Rourke says they are already hearing that farm land rental rates in Illinois will decline slightly in the coming year. She says that’s one indication of what the rates might do in Iowa.

(Radio Iowa)