Presentation Objectives

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1 Iowa 2011 Cash Rental Rate Survey & Leasing Overview May 2011 Steven D. Johnson Farm & Ag Business Management Specialist (515) Presentation Objectives Overview of the 2011 Iowa Cash Rental Rate Survey Trends in Iowa Cash Rent Rates Farmland Fact Finding Farmland Market Value Tillable Acres Corn Suitability Rating (CSR) Drainage and Field Layout Yield History Potential for Flexible Cash Farm Leases ISU Extension Resources & Program Planning 1

2 Iowa Cash Rent Survey Overview Compiled every year since survey respondents totaled 1, % came from farmers 24 % from landowners 22 % from professional farm managers 14 % from lenders 7 % from other professionals Reports compiled by county and crop reporting ti di district ti t Survey includes hay and pasture rental rates. Source: Cash Rental Rates for Iowa 2011 Survey 2011 Iowa Cash Rent Survey Source: Cash Rental Rates for Iowa 2011 Survey 2

3 2011 Cash Rent Survey Findings Average Cash Rent on tillable land increased 16% Statewide Average Cash Rent estimated t at $214 per acre increase of $30 per acre or 16% over 2011 Average rents were higher in all 9 crop reporting districts East Central increased $23 per acre (12%) Southwest increased $37 per acre (21%). Source: Cash Rental Rates for Iowa 2011 Survey $5,000 Iowa Land Values and Rents Lagged One Year $200 $4,500 $180 $4,000 $160 $3,500 $140 $3,000 $120 $2,500 $100 $2,000 $80 $1,500 $60 $1,000 $40 $500 $20 $0 $ ISU Land Values USDA Rents Source: 2009 Iowa Land Value Survey, Duffy, ISU Extension 3

4 Average Rent to Value in Iowa 10% 9% 8% 7% 6% 5% 4% 3% 2010 Iowa farmland value average of $5,064 per acre. 2% 1% 0% Expected Rent: 4.2% X $5,064 / acre = $ 214 / acre 61% Lyon Sioux Plymouth 58% Woodbury Monona Iowa Farm Land Rented Harrison 66% Osceola O'Brien 61% Cherokee Ida 60% Pottawattamie 53% Mills Crawford Dickinson Buena Vista Shelby 69% Clay Sac 51% Montgomery Carroll 55% Audubon 50% Cass Emmet 70% Palo Alto 68% Pocahontas Calhoun 36% Adams Greene 48% Guthrie 46% Adair 58% Kossuth 67% Humboldt Webster 37% Union 62% Dallas Boone 45% Madison 61% Winnebago 70% Hancock 67% Wright 67% Hamilton 26% Clarke Polk 62% 37% Warren Story Worth Cerro Gordo Franklin 61% Hardin 26% Lucas 56% Marshall 55% Jasper 37% Marion Mitchell 58% Floyd Butler 67% Grundy 28% Monroe 53% Tama 34% 46% Poweshiek Mahaska 48% Howard 50% Chickasaw 51% Bremer 56% Black Hawk 37% Keokuk Benton 40% Iowa 38% Winneshiek 48% Fayette 54% Buchanan 40% 53% Linn 47% Johnson Washington 28% Allamakee 31% Clayton 42% 60% 46% 36% 27% 20% 27% 24% 22% 32% Fremont Page Taylor Ringgold Decatur Wayne Appanoose Davis Van Buren 0% to 40% 37% 40% to 50% Lee 50% to 60% 60% to 75% 36% Wapello 33% Jefferson 39% Henry Delaware 45% Jones 59% 46% Louisa Cedar 51% Muscatine 50% Des Moines 30% Dubuque 35% Jackson 58% Clinton 59% Scott Source: Iowa Land Tenure Survey, Duffy, ISU

5 Farmland Fact Finding 1. Farmland value estimate for tillable acres ($ per Acre) 2. Number of Tillable Acres (found at County USDA FSA Office: Form 578 completed annually) 3. Corn Suitability Rating (CSR) found at County Assessor's Office or NRCS Soil Survey 4. Drainage Issues and Irregular Shapes of Fields (Tile and Terrace Maps, Aerial Photos) 5. Most recent 5-Year Actual Yields on that Farm (Corn & Soybeans). Corn Suitability Rating (CSR) Weighted Average Calculation Soil Type Acres Percent CSR T370B % % 60 T % % 91 T % % % Total % Source: Your County Assessor or County Soil Survey Source: USDA NRCS Office 5

6 Crop Value vs. Cash Rent ($/Acre) $/acre Gross Crop Value, State Averages $900 $800 $700 $600 $500 $400 $300 $200 $100 $- Corn Soybeans Cash Rent Source: Edwards, ISU Extension Economics, May, 2011 Cash Rent as a % of Gross Revenue Cash Rent as % of Gross Crop Value 60% 50% 40% of Soybeans 40% 30% 20% 10% Corn Soybeans 30% of Corn 0% 10-year averages: corn 31%, soybeans 42% Source: Edwards, ISU Extension Economics, May,

7 Flexible Cash Leases Option A: Rent = % of gross revenue Option B : Rent = base rent + bonus Bonus = (gross revenue base revenue) x % Profit-Sharing ISU Extension Rental Rate Sources ISU Ag Decision Maker Web Site Cash Rental Rates for Iowa 2011 Survey Computing a Cropland Cash Rental Rate Flexible Farm Lease Agreements Computing a Pasture Rental Rate 7

8 Farmland Leasing Programs Planned Newspaper and Magazine Articles Newsletters Website Postings Statewide Meetings in July and August 2011 Farmland Leasing Books Webinars and Webcasts Extension Farm Management Field Specialists available Statewide 8