The value of an average acre of Iowa farmland rose 7.8% for the six-month period ending March 1, according to the Iowa Chapter of the Realtors Land Institute (RLI). In addition the survey indicates values are up an identical 7.8% for the year ending March 1, as values were essentially flat for the six-month period ending September 1, 2020.
Participants in the semi-annual survey were asked to estimate the average value of farmland as of March 1, 2021. These estimates are for bare, unimproved land with a sale price on a cash basis. Pasture and timberland values were also requested as supplemental information.
These results will come as no surprise to many as net farm incomes have surged in recent months, says Elliot Siefert, who conducted the survey along with Matt Vegter. The surge in commodity prices to five-year highs along with the high level of government support payments in 2020 have brought new optimism to the land market. Other major factors driving these increases are low interest rates and a very low supply of quality farms being offered to the market, he notes.
The northern tier of three crop reporting districts shows the greatest strength, ranging from an 8.3% to 9.6% increase in cropland values. The southern tier shows the most modest gains ranging from 6.2% to 6.6% from September 2020 to March 2021. Timber and pasture acres show similar strength, boasting a 7.9% increase to timberland values and a 6.5% to pastureland values.
Farmers remain the dominant buyers of Iowa farmland, “but there is plenty of investor money out there looking for high-quality cropland” keeping buyers honest at auctions, says Siefert.
The RLI’s farmland value survey has been conducted in March and September since 1978.