Cash rental rate rises with commodity prices, farmland values

CEDAR RAPIDS -- Five farmers who collectively rent more than 2,000 acres of tillable farmland owned by The Eastern Iowa Airport will be paying $375 per acre in the coming year.

The Cedar Rapids Airport Commission on Monday approved cash rental contracts negotiated by Farmers National Co. with Verne Hosek, Rick Nolan, Ron Nove and Marvin Trachta. The rental rate is $85 per acre higher than it was in 2010.

Under the terms of the contracts with the airport, the full amount of the rent is due March 1. The airport will receive $767,700,  an increase of $174,012 from 2010.

The money goes into the airport's general operating fund.  The farmland surrounds the airport, which has acquired the land for

potential future expansion.

Iowa State University's 2011 farmland cash rent survey, released in May, found high quality farmland in Linn County fetching cash rent of $268 per acre for corn and soybeans. The statewide average for all crop reporting districts was $214 per acre.

ISU Extension Economist William Edwards, who compiled the survey, said farmland cash rental rates were pushed significantly higher by the favorable corn and soybean prices that farmers enjoyed in 2007 and early 2008. That was followed by lower prices in late 2008 and 2009, which took much of the steam out of the land market.

Prices took off again in fall of 2010 and increased this year due to tight grain supplies and increased demand worldwide. ISU will release its latest farmland value survey on Wednesday.

A Federal Reserve Bank of Chicago survey of ag lenders found that farmland values rose by 25 percent in July through September 2011 versus the same months of 2010. The value of Iowa farmland rose by even more -- 31 percent.