CSR 2 is coming out soon
If you pay real estate taxes then “yes,” this will affect you. The original Corn Suitability Rating (CSR) system was set up for the county assessors to better value land in uniform manner for assessment purposes. The CSR ratings for each soil attempts to rate each soil type on a scale from 1-100 on the ability to raise corn. The ratings assume adequate drainage, fertility, management and operator ability. It also assumes the soil survey folks that walked and probed the land from 1950s through the 1970s did an accurate job of mapping out all the squiggly lines on the surveys. It also assumes the top soil has remained the same over all these years. For tax assessment purposes this is probably ok and helps the assessor’s stay out of arguments with tax payers since they can refer back to the soil survey they had nothing to do with. For landowners evaluating property for valuation purposes this system leaves a lot to be desired.
In general, the soil survey was fairly accurate but farmers will tell you that the soil map is no substitute for experience on the property and watching the production. Most will tell you that once they see the map it is fairly accurate, but they aren’t totally in agreement. For the last 20 years or more the CSR system has been adopted for use in land sales and lease rate determination. You will see statistics of land selling for anywhere from $80-$160/CSR point depending on your area and farm characteristics. You will also see land evaluated for lease at figures from $2/CSR to $7/CSR point in the last year. This is certainly a way of valuating farm land but the variance is neither accurate nor consistent enough to use. There can be too many mistakes either way. On an 80 CSR farm a $10/CSR difference is $800/acre and a $1/CSR mistake on lease is $80/acre. That doesn’t sound too bad until you figure a 160 acre farm in Iowa would result in a mistake of $128,000 in sale value and a $12,800 mistake in annual rental value. It can be an expensive guess.
Now Iowa State University Extension is coming out with CSR2 as an update to the original CSR and everyone is concerned about how this will affect their land and rental values. It shouldn’t affect them at all except for at the tax assessor’s office. This is due to the fact that land should be valued in a business person’s mind upon productive ability and not a somewhat arbitrary number that doesn’t account for at least six variables in determining a farm’s market value. Additionally, since the original CSR system was put into place between 40-60 years ago the farm may not even be the same from when it was soil tested. Farms with any flood activity and erosion are not the same. Some are better and some are worse. It doesn’t take a C slope or higher for erosion to affect land either. Go take a look at northern Grundy County this year and see. There is some of the best land in the world with an A or B slope that will never be the same. It may look the same after working in the ditches but a significant amount of soil has left the farm and will never come back. If there has been any terraces built or pattern tiling done, this changes things as well. Pattern tiling is not considered adequate drainage but is much better than average, which considerably changes the productivity that the CSR doesn’t account for.
The bottom line is that land should be judged on productivity compared to other tracts and not a CSR or CSR2 system. The problem is that in the past not a lot of good records were available to landowners. Some were never kept by the operator or made available to the landlord. Some landlords didn’t care and didn’t see the value. This is changing. Buyers and tenants are leery of land with no fertility, drainage or production data. Some should be discounted since they are below average in these areas but the bad part is some are in good condition but are not attaining full value since owners can’t prove the actual quality of the farm based on records. One buyer told me when purchasing a farm they discount land $1,000 per acre for ground that has been cash rented. That is $500/acre for drainage and $500/acre for fertility and would not discount it if it the seller can prove that all is in order. What we know is that good tenants will provide the data and be proud to show you how they care for your land.
The solution is to begin or keep up the farm records on your property. It is only good business to do so. You can then show that your land is the best it can be no matter what the CSR or CSR2 may say. Can you judge a young baseball player by seeing his parents? No. Can you judge a horse by seeing its pedigree? Partially but you’ll go broke betting on pedigrees. Can you judge a farmer by seeing his pickup? No again. So why judge land with a CSR? Let the assessor do it this way. We know better.