Varley Law Office PLC

Varley Law Office PLC
201 NE 2nd ST, Stuart, Iowa 50250; (515) 523-2456

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Tuesday, August 25, 2015

2015 Farm Leases

___Now is the time dictated by Iowa law to begin negotiating crop land leases for 2016 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, 2016, 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, 2015. 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 (“corn suitability rating” or in some regions “crop suitability rating” CSR2 is an updated 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: http://www.extension.iastate.edu/Publications/FM1801.pdf]. 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 4% ROI. The leases I have prepared so far this year continue to fall in the $2.50 to $3/CSR point range, with the higher quality land falling at the higher end of that range. Land prices in our part of the state have fallen roughly 6% since a year earlier (& have continued to soften since the survey), in tandem with lower commodity prices. I would expect farm lease rates to follow a similar trend.
___Please contact my office if you have questions. Good luck with your negotiations!