How has farmland leasing changed?

In Iowa, with 26 million of its 30 million acres classified as cropland, 65% of farmland is under a lease, with cash rent being the most common arrangement covering 56% of Iowa farmland acres.

Leasing has been prevalent in Iowa for decades, but the composition has shifted — cash rent leases (including flexible leases) overtook crop-share leases in the 1990s and have grown steadily since.

Historically, crop sharing was valued for its ability to share risk. If drought or low prices reduced yields, both landlord and tenant bore part of the loss. If conditions were favorable, both benefited.

Economists call this risk-sharing, and it was especially important before formal insurance markets were available.

But crop sharing may also create problems. Because landlords cannot easily access production records, they worried about opportunism — that tenants might underreport yields or reduce effort since they only kept part of the crop. This limited the appeal of share arrangements, even as they helped address risk.

The development of federal crop insurance offered a way out of this tradeoff. By allowing tenants to insure their own yields and revenues, crop insurance provided risk protection without requiring landlords to share in production outcomes.

Notably, the timing of crop insurance reform coincides with the decline of crop-share contracts. The program, created in 1938, remained small for decades, but major expansions in 1980, 1994 and later brought broad participation. In 2022, more than 1.2 million crop insurance policies were sold, and coverage reached about 90% of all insurable acres in the U.S.