The cost to rent an acre of Iowa farmland increased nine percent last year to a record $279.
Iowa State University’s Alejandro Plastina says the strong farm economy drove the increase. “We saw a great farm year last year with good profitability land values are also at very high levels and still increasing according to recent surveys,” he says. He says there’s demand when land becomes available to rent and that is also pushing up rents.
“Farmers are trying to expand to extract better economies of scale and be more profitable with larger farms so it makes sense,” Plaustina says. He says some input costs came down, and the increase in interest rates has not been a factor after several years of good farm income.
“Farmers have built up some cash reserves and are not using credit loans, operating loans as much as in other years in the past. That higher interest rate is not affecting all farmers as it would have a decade ago,” Plaustina says.
There was considerable variability across counties depending on the quality of the land — but 91 out of the 99 Iowa counties experienced increases. Only Des Moines, Jefferson, Lucas, Muscatine, Van Buren, Wapello, Warren and Woodbury counties saw declines in their overall average cash rents.
Plaustina says farm income projections are expected to decline over the next couple of years, putting downward pressure on cash rents. “Now the concern is with 2024, on the whether we will continue to see to see inflation in inputs and declining corn and soybean prices, and you know that will be concerning in 2024 if that happens,” he says.
Plaustina says 51% of the farmland in Iowa is rented, with the majority of rent in the form of cash deals.
=== In the north-central Iowa based District 2 crop reporting district, cash rents increased from an average last year of $261 to $285. In Cerro Gordo County, the average cash rent was $292 per acre, with high quality land averaging $340, medium quality $291, and low quality $243.