By Gary Wright, Farm Management Specialist
OVERVIEW OF LAND VALUE & LEASING
Over 58 percent of the cropland in Iowa is being farmed by someone other than the owner. Throughout the last month, over 70 farmland leasing meetings were scheduled or have been delivered across the state of Iowa. Northwest Iowa played host to six of those meetings, with one final in-person workshop scheduled for Aug. 22 in Dickinson County and a statewide webinar at 9:00 a.m. on Aug. 26 (https://go.iastate.edu/DMNFA0).
Landowners and operators/tenants received results from these earlier-in-the-year 2024 surveys conducted by ISU Extension and Outreach: (a) farmland values, (b) operating costs; (c) custom farming rates; and (d) leasing rates. The survey outcomes were outlined, as guidelines, in previous articles.
Considering the most current grain market adverse trends, very special attention is given to Ag Decision Maker analysis (AgDM File C2-20). This decision tool offers seven approaches to “Computing a Cropland Cash Rental Rate:”

• What Others are Charging or Paying;
• Average Yields;
• Corn Suitability Rating (CSR2);
• Share of Gross Crop Value or Revenue;
• Return on Investment;
  • Crop Share Equivalent; and
• Tenant’s Residual
  Determining a 2025 fair rate is not easy. Cash lease rates generally are too low when market prices are increasing, and yields are high; and too high when opposite ag conditions apply.
  The final lease rate, negotiated in good faith by the knowledgeable lease parties, should consider several other risk factors including (a) variations in crop prices and yields; (b) USDA program variables; (c) history of past lease contracts and the longevity of the next lease contract; (d) farm proximity to above-average local grain prices, (e.g. biofuel plants, feed mills); and (e) field size/shape and if adversely affected by creeks or terraces.
  Remember, in the state of Iowa, a legal termination of the 2024 lease is required for the 2025 lease contracts to be modified. The termination must be completed in writing on or before September 1.
  2024-25 MARKET OUTLOOK
  Present grain price volatility makes 2025 lease decisions additionally difficult, based upon the most recent WASDE release (August 12, 2024).
  The 2024-25 corn crop current projected per bushel season average price is $4.20, 45 cents lower than last year’s average and down $2.34 from the 2022 crop year. Domestic corn production is targeted to be at 183.1 bushels per acre, which is a record. U.S. corn exports are projected higher, while foreign production and their exports (due to extreme heat and dryness in Europe and Russia) are projected lower.
  The 2024-25 soybean crop’s current per bushel season average price is $10.80, $1.70 lower than last year’s average, and down $3.40 from the 2022 crop year. Contributors are largely due to higher South America production and lower China imports (from their own higher production).
  The outlook for proteins and milk also reflects a volatile market. 2024 beef demand remains strong causing beef prices to increase, despite modest beef production increases in 2024 (forecasted lower 2025 production). In pork production, despite lower 2025 pork prices, demand from exports (2024 and 2025) are currently lower. Broiler production and exports are projected higher (turkeys lower). Egg prices in 2024 and 2025 are projected higher on relatively tighter inventories. Milk production is forecasted lower in 2024 and 2025, following reduced cow inventories and per-cow output.
  Source: https://www.usda.gov/oce/commodity/wasde/wasde0824.pdf
  As always, please contact me with any questions or feedback at gdwright@iastate.edu or 712-223-1574.