Prices for crops and crop inputs have stabilized. Farm rents should do the same, according to Iowa State University extension farm management specialist Tom Olsen, who spoke Friday in Emmetsburg. "Steady as you go," Olson said.
The big picture is still one of national recession with a lesser effect on agriculture. Changes to a one-year-old lease are not really needed, he said, "But maybe the rent should be down a little bit." If the lease was negotiated several years ago when prices were more volatile, big changes may be appropriate.
Current cash rent rates in the Laurens area average near $190/acre for high quality land, according to an ISU survey. Two-thirds of the farmland in this area is rented to tenants. Since the 1920s more than half of Iowa's land has been farmed by tenants.
Land values have risen 8% in the Midwest according to the Federal Reserve Ag Letter of May 2010, but the number of land sales in 2009 declined 25% compared to a year earlier. The main driver of high land prices is low interest rates (see photo below). "Keep your head down. Don't leverage two farms to buy a third farm," Olsen advised.
Farm rent agreements automatically renew on September 1 unless either tenant or landlord cancels the lease in writing. Now is the time to decide if changes are needed.
Olsen also suggested farmers learn to use on-line resources such as the Web Soil Survey and the ISU Ag Decision Maker. Olsen can be reached at tolsen@iastate.edu.
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