Now is the time dictated by Iowa law to begin negotiating crop land leases for 2024 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, 2024, 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, 2023. 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 CSR21 of the soil in question is the most accurate and fair way to arrive at a comparable rent.2 Below is a table of farmland values and cash rents in counties for which we prepare farmland 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 farmland looks like. The predicted annual rental is based on a 3% return on investment. With interest rates higher than that and most commodity prices declining, expect farmland values to level out and perhaps even decline, though demand remains strong. According to USDA, the average cash rent in Iowa was $269/acre in 2023,3 and you can see from the table above that crop land rents have mostly settled into the $3.50-$3.75/CSR2 range. One of the puzzling disconnects in the ISU survey is that good quality pasture rents for between $80 & $120/acre but comparable hay grounds typically brings twice that rate, which is a bigger difference than nutrient removal explains.4 Hunting rights now often garner more income than grazing corn stalks.
Please contact our office if we can be of assistance. Good luck with your negotiations!
Sincerely,
VARLEY LAW OFFICE, PLC ©2023
3Updated “corn suitability rating” assessment You can calculate a CSR2 for your farm http://websoilsurvey.nrcs.usda.gov/app/WebSoilSurvey.aspx or get it from your assessor information http://www.iowaassessors.com/
4 See Computing a Cropland Cash Rental Rate: https://www.extension.iastate.edu/agdm/wholefarm/pdf/c2-20.pdf
