A week ago, the farmer who rents our 365 acres called to say he had to drop the rent by $45 an acre. Corn and soybean prices have tumbled in the past year, while farm input prices have continued to rise.
Under Iowa law, farm lease modifications must be served by September 1 of the prior year. If notice is not served, the lease continues for another crop year upon the same conditions as the original lease.
I immediately emailed Roger McEowen, professor of Agricultural Law at Iowa State University, who sent this advice:
It's really up to you as the landlord as to whether you want to renegotiate with your tenant. If you have an oral lease, the lease will continue for another year on the same terms and conditions. If you think it's a matter of the tenant being able to remain financially stable by reducing the rent, then it might be the thing to do. If the tenant has been good, you may want to consider that as a plus as opposed to getting someone new. But, on the law, the rent stays the same for another year unless you both (tenant and landlord) agree to reduce it. If you think you need a lawyer to assist you in renegotiating a new lease, let me know and I will see if I can get someone to assist you.
Bob made a few calls to other local farmers and over the next few days had kitchen-table and pick-up-truck meetings with them about renting the farm. In the end, we were able to renegotiate the lease with our tenant. It was a learning experience that is happening all over the Midwest this spring as land and commodity prices continue to fall and cash rents come due.