Iowa farmland cash rents bringing relief

Iowa farmers facing declining prices for their corn and soybean crops are seeing some relief in the rent they are paying for farmland.

AgriBank Farm Credit Bank of St. Paul, Minn., reported average cropland rent in Iowa fell 3.8 percent from $260 per acre in 2014 to $250 per acre this year, according to U.S. Department of Agriculture data. Iowa was one of five states in the Midwest monitored by AgriBank that recorded a drop in cropland cash rent.

Average cropland cash rents in the 15-state AgriBank district declined for the first time in over 20 years, according to USDA survey data. The 2015 average cash rent dropped $1 to $153 per acre, which is $9 above the U.S. average of $144 per acre.

In terms of percentage change, the biggest increases in cash rent were recorded in South Dakota (8.6 percent), Ohio (4.2 percent) and Arkansas (3.9 percent). The biggest declines were in Michigan (-4.1 percent), Iowa (-3.8 percent), Minnesota (-2.7 percent) and Illinois (-2.6 percent).

District average farmland and pastureland values slowed in growth, but did not decline, in 2015, driven by considerably lower commodity prices that result in lower net farm incomes in the grains and soybean oil seeds sector.

'States heavily concentrated in corn and soybean production experienced declines in cropland values, while values in states with more diversified crops, including wheat and rice, continued to increase, albeit at a more moderate pace,” said Jeff Swanhorst, AgriBank executive vice president of credit and chief credit officer, in a news release.

Swanhorst said the outlook for most crop producers looks challenging for the next five years with most forecasters projecting corn and soybean prices to be at or near break-even levels.

'Producers may benefit from USDA commodity title programs that could be triggered by lower commodity prices,” Swanhorst said. 'These programs, combined with disciplined risk management practices and the generally strong financial condition of borrowers comprising the District's crop portfolio, are expected to mitigate the initial impact.”