The cash rent for farmland owned by The Eastern Iowa Airport will be $400 an acre for leases that take effect March 1 — an increase of 7 percent over $375 an acre this year.
Airport Finance Director Don Swanson said leases have been signed with the same five farmers who leased the airport's 2,047 acres of farmland this year. The 2013 cash rent will amount to $818,800, up from $767,700 this year, Swanson said.
The money goes into the airport's general operating fund. The farmland surrounds the airport, which has acquired the land for potential expansion.
Iowa State University's 2012 farmland cash rent survey, released in May, found high quality farmland in Linn County fetching cash rent of $269 per acre for corn and soybeans. The statewide average for all crop reporting districts was $252 per acre.
Larry Greiner, senior farm manager for Farmers National Co., said there is a strong demand for Iowa farmland.
"Grain prices have been strong and income is up in the farming community," Greiner said. "Expansion of farm operations is key, so there is a lot of competition for available farmland. Some of our increases have been substantially more than what the airport commission approved, depending on the location of the leases.
"There are some farms in this area where the cash rent starts at $500 an acre."
Greiner said he would have had no difficulty finding another renter if any of the existing operators had balked at the airport's rent increase.
"I have applications on my desk," Greiner said. "I get calls every month from people looking to rent additional farmland. New tenants are certainly available."
Greiner said today's higher cash rental prices are directly related to the lack of competing investments.
"A lot of the farmland is purchased with cash because CD rates are not performing and there's volatility in the stock market, so farmers are looking for a safe haven," he said. "They could purchase hard assets like gold, silver or precious metals, but they don't produce anything on an annual basis.
"They don't gain you anything until you sell them. If you invest in farmland, at least you're getting some kind of an annual return."
ISU's farmland value survey, released last week, showed average sale prices rising above $12,000 an acre in northwestern Iowa between Oct. 1, 2011, and Oct. 1 of this year. Farmland values are likely to continue rising as corn and soybean prices remain relatively high due to increasing global demand for food, Greiner said.
Greiner, who has been involved with farmland management, leasing and sales for more than 30 years, said farmland rental rates are exceeding what many people paid for their farms."My parent's farm was purchased for $65 an acre in 1952," he said.