Resources Help Farm Tenants, Landowners Negotiate Rent

AMES — Negotiating leases can be complicated for farmers and landowners who are unsure of future grain prices, yields and government payments.

The Iowa State University Extension’s Ag Decision Maker website has updated information on various types of leases and forms to make the process easier for farmers and renters.

“This year’s lower grain prices are forcing many farmers to revise their budgets in an effort to remain profitable,” Alejandro Plastina, Iowa State Extension economist, said in a news release. “Where can farmers cut costs without impacting yields? One way to cut costs and save money may be by negotiating cash rents to a sustainable level.”

Ag Decision Maker specialists say tenants and landowners are in negotiation on leases through the winter months.

“The deadline to terminate a lease was Sept. 1, but many lease negotiations will go on now through early next year,” said Ann Johanns, program specialist with Iowa State Extension. “It helps to get rental agreements decided early so the tenant can plan for those acres when purchasing inputs for next year.”

The Ag Decision Maker website has leasing decision tools to help farmers, according to Extension farm management specialist Kelvin Leibold.

“There are resources on the website to help when updating or negotiating a lease,” he said.

“If you are seeking help with rental agreements, our extension farm management specialists can help address questions that landowners, tenants or other agri-business professionals may have about current issues related to farmland ownership, management and leasing arrangements.”

Johanns said more than half of Iowa’s farmland is rented and strong landlord and tenant relationships are important. Typical Iowa farmland cash rental rates decreased by $14 an acre from 2014 to 2015; every district in Iowa showed a decline in reported rental values, she said.

The decreases ranged from $24 in Central Iowa to $4 in Northeast Iowa — which reported the highest average in 2015 at $273. The lowest district value was $187 in South Central Iowa.

Recent surveys (Realtors Land Institute, Federal Reserve Bank of Chicago) have shown continued declines in land values, and that trend will appear in 2016 rental values as well, Johanns said.

Additional information, including lease supplements for adding long-term improvements, such as conservation practices or tile drainage, can be found on the Ag Decision Maker website: https://www.extension.iastate.edu/agdm/.

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