Farmland rents are likely to continue to move higher in 2012, although at a slower pace than the past two years.
“We may not see the top rents get any high next year, but we’ll likely to see some inching up on the lower rents,” says William Edwards, Iowa State University ag economist. This would result in higher averages for 2012.
One key reason for the expected jump in rental rates for 2012 is that a number of rents were not adjusted upwards for 2011; they were negotiated earlier before prices started to go up or there was production uncertainty.
ISU’s 2011 survey found an extreme case of variability in answers on cash rent. “People didn’t always know what a typical rent was for their area, because there is so much variation.”
For example, the survey shows a range in Wright County for 2011 of up to $425 per acre, which means that someone who has high quality land there is renting it for an average of $425.
“People (in the survey) are highly influenced by the most recent things they hear or rental rates they know about,” Edwards says. The only hitch to higher rents for 2012 would be a sudden crash in crop prices, he says.
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