Okay Iowa Farm Bubbas & Bubbettes,
A serious (i.e. non political or social save the world) question today. Assuming you are either a renter or owner of Iowa farmland, how useful is the Iowa State Extension Services’s annual “Cash Rental Report” with regard to your negotiating next year’s contracts?
Amateur layman speaking now: It seems to me that by having an impartial 3rd party (i.e. ISU Extension) provide an individual county and quality of dirt breakdown in both rental averages and ranges, the May 2018 survey document is a fair departure point for rental negotiations.
Or, am I missing some other essential variables* in the rental negotiations engagement?
Thanks in advance for your random thoughts.
[* Needless to say, the renters’s character as both a good farmer (prudent steward of the land) and his or her business acumen (pay their rent/bills on time) would certainly be of great importance.]
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The rental rate survey is a "piece of the puzzle", but 2 farms right next to each other can have different soil types, CSR ratings, one might be pattern tiled, one higher fertility than the other.
And little nuances like if the farm up for rent is adjacent to a land hungry tenant, they`ll easily pay $20 more if they could just tear the fenceline out and plant right through. Or maybe a tenant needs land for manure spreading and if it`s close to his buildings, it might be a good deal for him and the owner and willingly to pay a premium.
I use it an know some others who use it, but I don't have any evidence that it is widely used or a major factor. I just don't know outside my circle.
Take a look at the data behind the numbers to see how many and what kind of input is in the numbers.
BA & Jim,
Thanks to both of you. This helped.
Our situation is that the recently inherited property has been rented to the same guy for the past forty eight years. Great guy, friend of the family, great farmer, and great manager. Check, check, check, and double check.
The current monthly rate, however, is 15% below the average reported on the 2018 ISU Extension Cash Rental Rate report by our county and quality of farmland.
So, the question is not really about trying to get the highest rental dollar/acre from the current farmer, but more about bringing the agreement within the market norm. Obviously, at the farmer’s advancing age, we will eventually need to put the property up for new rental bids too.
Thanks again for your insight.