Cost to rent Iowa farmland sets record high this year, a new ISU survey says

The cost to rent Iowa farmland this year reached a 10-year high, driven by rising land values and recent strong farm income, a new Iowa State University survey shows.

This year's average farmland rent climbed 9% to $279 an acre, according to the survey released Friday. That beat the record set in 2013, when the average reached $270 an acre.

At the time, Iowa and other states were struggling with an extended drought that drove corn and soybeans prices to new highs. Compared to 2013, Iowa corn prices are 2.8% higher, and soybean prices are 4.4% lower, based on figures unadjusted for inflation, ISU said.

Despite this year's record, Alejandro Plastina, an ISU Extension economist, expects farmland rents to decline.

"Lower projected crop prices, along with sustained input inflation in 2024 would result in lower net farm income and put downward pressure on cash rents," Plastina wrote in an analysis of the survey results.

As rents rise, farm income expected to fall

While farm income has climbed over the past two years, the U.S. Department of Agriculture said in February that farmers will likely see it decline 16% this year with lower prices for most crops and livestock.

This year, though, brought strong rental price increases for farmland owners. Only eight of Iowa’s 99 counties saw a decline: Des Moines, Jefferson, Lucas, Muscatine, Van Buren, Wapello, Warren and Woodbury, ISU said.

Farmland rents vary depending on the land’s ability to produce corn and soybeans, ISU said. The rent for low-quality land climbed 6% to $230 an acre; medium-quality land jumped 8.6% to $277 an acre; and high-quality land spiked 11.1% to $330 an acre.

More:Iowa farmers head to fields with record high production costs, lower corn, soybean prices

Experts said farmers will likely get squeezed this year, with the cost to raise a crop rising while prices for corn and soybeans, Iowa's dominant crops, decline. Production costs are expected to rise 20%, driven by rising interest rates, and higher seed, fertilizer, chemical and land costs.

Iowa farmland values climbed 17% last year to about $11,400 an acre over 2021.

More:See what farmland rents are doing in your county in Iowa.

Survey details

The survey, which Plastina conducted with Ann M. Johanns, an ISU Extension program specialist, is based on 1,306 usable responses about typical cash rental rates in Iowa counties for land producing corn and soybeans, hay, oats and pasture.

Of the responses, 42% came from farmers, 37% from landowners, 9% from professional farm managers and Realtors, 7% from agricultural lenders, and 5% from members of other professions or respondents who chose not to report their status.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.