Upward Pressure Could be Coming to Iowa Pastureland Rental Rates
Interest rates and cattle prices have been relatively high in 2023. Both factors are thought to contribute to rental rates. This article outlines the relationship of these variables and explains why an increase could be coming to pastureland rental rates.
Pastureland rental rates are related to land values and interest rates through the equation below:
Land Value= Rent/Interest Rate
As land values and interest rates increase, rents are expected to increase to hold the above relationship. The above equation outlines what is expected to occur. However, this relationship does not always hold.
Figure 1 shows these shows land value and rent statistics for Iowa pastureland. Both nominal and real (inflation-adjusted) values ...
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