Now
is the time dictated by Iowa law to begin negotiating crop land
leases for 2018 or at least notify your tenant/landlord, as the case
may be, if you wish to change any of the terms in your current lease.
(Remember that mutual consent is required if you want to make changes
in the middle of a multi-year lease.)
If
you wish to terminate a cropland or pasture lease ending March 1,
2018, and have not already done so, you must serve notice in the
manner set out in Iowa Code §562.7 on or before September 1, 2017.
This statute does not apply to custom farming arrangements, but by
tradition, many farm operators have come to expect notice by
September 1.
Basing
cropland rent on the current CSR2
(updated “corn suitability rating” assessment)
of the soil in question is the most accurate and fair way to arrive
at a comparable rent [See
Computing a Cropland Cash Rental Rate:
iastate.edu/Publications/FM1801 Computing a Farm Rental Rate].
In addition, you can calculate a CSR2 for your farm
[http://websoilsurvey.nrcs.usda.gov/app/WebSoilSurvey.aspx].
Below is a table of farmland values and cash rents from last year's
ISU surveys in counties for which I prepare farm land leases:
The table above is based upon
averages from sometimes limited survey results, but it does give a
general idea of what the market for Iowa farm land looks like. The
predicted annual rental is based on a 3.25% ROI. The leases I have
prepared so far this year now fall in the $2.00 to $2.85/CSR point
range, with the higher quality land falling at the higher end of that
range. Farm lease rates continue to fall in sympathy with soft
commodity prices. Land prices also continue to decline, but at a
much slower pace. I would expect that to change if interest rates
continue to rise.
Please
contact our office if you have questions. Good luck with your
negotiations!
