Leasing workshops provide resources on farmland surveys and leasing arrangements

Farmland leasing workshops for both tenants and land owners are being held again this year during July and August. These workshops are designed to assist landowners, tenants and other agri-business professionals with current issues related to farmland ownership, management, and leasing agreements. In previous years, over 50 meetings were held across the state. This year meetings will again take place in various counties, and there is sure to be one at a time and place that will work for you.

Meetings are approximately three hours in length and are facilitated by ISU Extension farm management specialists. Each workshop attendee will receive a set of beneficial materials regarding farm leasing arrangements and farmland ownership.

Topics covered include:

  • Iowa Cash Rental Rate Survey and Land Values Survey
  • Comparison of different types of leases
  • Lease termination
  • Impacts of yields and prices
  • Calculating a fair cash rent
  • Use of spreadsheets to compare leases
  • Issues unique to this year’s production and an outlook for 2014.
  • Available Internet resources

The ISU Extension and Outreach Calendar lists available meeting dates, locations and links to more information. Locations will be added as they become available, or contact your County Extension Office to find the nearest meeting location. The Leasing section of AgDM also provides useful materials for negotiating leases, information on various types of leases, lease forms and newly updated Decision Tools.

Knowing the latest information and where to find the best resources will make decisions easier for you and your clientele. Look to ISU Extension and Ag Decision Maker for information and decision tools this summer.

Ag Decision Maker (AgDM) 

An agricultural economics and business website.

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Farmland rental rates increase moderately in 2013

Contributed by William Edwards, extension economist, wedwards@iastate.edu, and Ann Johanns, extension program specialistaholste@iastate.edu

Rental rates for Iowa farmland have been pushed significantly higher by the favorable corn and soybean prices that farmers have enjoyed since 2010. This trend continued in 2013, but the rate of increase slowed considerably.

c2-10_2010_new

Results from the most recent survey of farmland rental rates carried out by Iowa State University Extension and Outreach showed that the average estimated cash rent for corn and soybean land in the state for 2013 was $270 per acre, an increase of $18 per acre or 7% from last year. This compares to increases of 16% in 2011 and 18% in 2012. Lower crop yields due to prolonged dry weather and lower price forecasts for the 2013 crop have tempered the optimism about prospective profits.

Average rents were moderately higher in all nine crop reporting districts, with increases ranging from 13% in east central Iowa to 4% in southwest Iowa.

Overall Average of Typical Cash Rents 2009-2013, Corn and Soybean Acres

2009

2010

2011

2012

2013

District 1

$187

$188

$224

$267

$283

District 2

196

 191

 220

 277

294

District 3

186

 192

 223

 266

281

District 4

196

 195

 227

 279

294

District 5

197

 195

 226

 275

297

District 6

193

 196

 219

 252

284

District 7

170

 176

 213

 246

257

District 8

146

 151

 177

 193

210

District 9

173

 169

 198

 217

229

State

$183

$184

$214

$252

$270

Typical rental rates per bushel of corn yield, soybean yield, and CSR point were computed for each county. In addition, typical charges for land growing oats and hay, for grazing pasture and corn stalks, and for renting hunting rights were reported.

The intent of the Iowa State survey is to report typical rents being paid each year, not the highest nor the lowest values heard through informal sources. Rental values were estimated by asking people familiar with land rental markets what they thought were typical rates in their county. The number of responses received this year was 1,703, a 20% increase from last year. Of the total responses, 50% came from farmers, 27% from landowners, 13% from professional farm managers, 8% from agricultural lenders, and 2% from other professionals.

The Cash Rental Rates for Iowa 2013 Survey is available online as a downloadable document from the Ag Decision Maker website, or Extension Store.

Other resources available for estimating a fair cash rental rate include the Ag Decision Maker information files Computing a Cropland Cash Rental Rate (C2-20), Computing a Pasture Rental Rate (C2-23), and Flexible Farm Lease Agreements (C2-21). All documents include electronic decision tools to help analyze leasing questions.

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Drought Questions: Crop Insurance Indemnity Payments and Flex Lease Bonus Payments

Contributed by William Edwards, extension economist

Question: How do crop insurance indemnity payments factor into flex lease bonus payments?

Answer: Crop insurance indemnity payments can be included in the gross crop revenue value used to determine the cash rent payable under a flexible lease, if gross revenue is used to set the rent or the bonus portion of the rent. The payments should be net of the farmer paid premiums paid, however. This is true even in years when no payments are received, that is, premiums should be subtracted from the gross revenue before the percentage is applied to calculate the rent or bonus. In this way the landowner is indirectly standing a share of the insurance coverage which is supporting the gross revenue and rent each year. If the acres included in the insurance unit include multiple rented or owned farms, it may not be practical or fair to divide the crop insurance proceeds and premiums among the farms, however. How to handle crop insurance premiums and payments should be discussed at the beginning of the lease period.

For more on Flexible farm leases, see Ag Decision Maker Information File C2-21, Flexible Farm Lease Agreements, Information File C2-21, Flexible Cash Rent Lease Examples, and Management the Financial Risks of Drought-damaged Crops with information on Flexible Farm Leases that Work. Other drought resources from ISU Extension and Outreach are available on the Dealing with Disasters website.

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Managing the Financial Risks of Drought-damaged crops

Contributed by Steve Johnson, Extension Farm Management Field Specialist.

As a companion piece to the information presented in the Drought webinar from ISU Extension and Outreach, ISU Extension field specialist Steve Johnson looks at the effects of drought related announcements this week and the effect on crop insurance. Steve’s second webinar is focused on farmland leases, specifically flexible leases. The agendas for the 30 minute presentations are listed below along with links to the webinars and other related resources from ISU Extension and Outreach.

Management the Financial Risks of Drought Damaged Crops

  • Highlight the latest announcements from USDA regarding disaster declaration and emergency programs
  • Discuss crop insurance coverage, likely claims and indemnity payments
  • Pricing non-delivery of contracted grain and silage from drought-damaged corn
  • Discuss farm financial management decisions
  • Highlight ISU Extension web resources
  • Highlight and Iowa Flex Lease Performance
  • Provide ISU Extension Farmland Leasing Resources and Websites

Flexible Cash Farm Leases that Work

  • Overview of the 2012 Iowa Cash Rental Rate Survey
  • Summarize Iowa Cash Rent Trends and Rents as a % of Gross Crop Value
  • Discuss Potential for Flexible Cash Farm Leases and Case Study Farm
  • Summarize 2013 Estimated Costs of Crop Production (early estimates)

Related resources

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2012 Farmland Leasing Workshops Begin

More than half of Iowa farmland is rented, and that percentage continues to increase due to the changing demographics of farmland owners. The overall average of typical Iowa farmland cash rental rates increased $38 an acre from 2011 to 2012. These large increases, volatile grain markets and the effects of drought on current production will have a major impact on those making leasing decisions for the coming production year.

Iowa State University Extension and Outreach is conducting farmland leasing workshops at many locations in Iowa during July and August. Workshops are designed to assist landowners, tenants and other agri-business professionals with issues related to farmland ownership, management and leasing agreements.

“The 2012 meetings will focus on issues related to drought, land values and rental rates, including using CSRs and other tools for determining a ‘fair’ cash rent,” said Ann Johanns, program specialist with ISU Extension and Outreach. Other topics will include the impact of erosion on land values, implications of the proposed Farm Bill and other issues that will impact the next year in agriculture.

Each workshop attendee will receive a 100-page booklet of useful materials about farm leasing arrangements, Johanns said. Workshops will last approximately 2 ½ hours and will be led by Iowa State University Extension farm management specialists.

The Leasing Meetings page (www.extension.iastate.edu/agdm/info/meetings.html) lists available meeting dates, locations, and registration information. Locations will be added as they become available, or contact any county extension office to find the nearest meeting location. The Leasing section (www.extension.iastate.edu/agdm/wdleasing.html) of Ag Decision Maker also provides useful materials for negotiating leases, information on various types of leases, and lease forms, Johanns said.

“Knowing the latest information and where to find the best resources will make decisions easier for you and your clientele. Look to ISU Extension and Outreach and Ag Decision Maker for leasing information this summer,” Johanns said.

Ag Decision Maker (AgDM)

An agricultural economics and business web site.

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