Average rental price of Midwest farmland increases 54 percent

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Midwest farmland is being leased to tenant operators for an average of $351 per acre, according to results released from US Farm Lease of Ames, an online farm leasing company linking farm owners with potential tenants. This represents a 54 percent increase from September 2010 to March 2011.

The findings are based on 22 lease offerings in Iowa, Missouri and Nebraska. According to Mark Gannon, president of US Farm Lease, "Lease rates increased from fall 2010 to spring 2011 due to a rise in commodity prices and crop insurance guarantees. In addition, operators are hungry for land and are willing to provide any reasonable considerations that benefit the owner."

The following is a summary of the US Farm Lease findings:

Average Agreed Rental Rate                          $351/acre

Average High Bid                                            $356/acre

Average Size of Farm Offering                         198 Acres

Average Increase in Rental Rate/farm              54%

The jump in the per-acre lease rate also reflects the fact that most landowners have been severely under the market rental rates for their land, Gannon says. "Most landowners have very little knowledge about farm commodity prices, input costs, government programs or federal crop insurance ramifications. We give the landowner options for tenants who will pay a fair rent and offer the terms and conditions in the lease necessary to preserve the land."

The lease rate increase shows that landowners can adjust their profitability and also require better records on fertility, yield history, drainage and other pertinent data. "Many farms have land use considerations that should be specifically spelled out in a lease to properly care for their land," Gannon says.

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