Since the $4 corn headlines hit last winter, most Midwest renters have dreaded the fall deadlines for renegotiating cash rent farmland leases. Some landlords were eyeing a potential $1 or more per bu. increase in renter incomes for 2007, and looking to make up lost ground in 2008. Most of Iowa for example, didn't hike rents much last year because corn was still in the sub-$2 doldrums when terms were set last fall, farm managers say. Cash rents inched up just 9% statewide last year as a result.

"It was clear 2008 rents needed to be readjusted, but deciding what was a fair cash rent was one of the most emotional discussions we've had in years," Randy Hertz of the Midwest firm of Hertz Farm Management, Nevada, Iowa, told me this morning. "People are really stirred up."

That was confirmed when more than 100 subscribers joined DTN business advisor Danny Klinefelter and me for a recent webinar on how to negotiate cash rents (you can link to a rebroadcast of that session at www.dtnag.com/promot/cashrent starting Monday, Sept. 10).

Emotions are probably even higher in some parts of Iowa this week, as landlords who couldn't come to agreement on rental rates for 2008 have just sent renters termination notices by the state's Sept. 1 deadline. Now the shuffle for new renters begins, and the ultimate rates to be paid are still up in the air.

Hertz, who says about 25% of his firm's managed farmland operates under cash terms, can see both sides in the dilemma.

From a landlord's point of view, many of the rents set last year at $130 to $180 an acre looked severely under priced after corn started to rally last harvest. An extra $1 a bu. on 180-acre corn is $180 that all went to the renter's profit, he notes. The other side to the story is that marketing returns will be uneven. Some growers got "trigger happy" and sold way too early to capture the windfall, he noted, and "procrastinators won big time."

Farm tenants are making the case that diesel fuel prices are eating into margins, but Hertz doesn't buy it. It takes less than 1 hour of labor to raise an acre of corn, or less than 6 gal of diesel fuel per acre. Even though fuel prices are high, diesel is just not a big ticket item on most farms, he says.

Where landowners should have sympathy is fertilizer and seed costs. Hertz sees potash at $300 per ton, phosphate at $500 and nitrogen at $500. "That's up considerably from two years ago," he said. Forcing too high a cash rent on operators only increases the temptation of growers to mine fertility and scrimp on nutrients. "That should be a concern for both owners and operators," Hertz says.

Next on the agenda is answering reader questions about the rent negotiations. To submit yours, email Marcia.Taylor@dtn.com or post directly at Minding Ag's Business at www.dtnag.com.