The value of an acre of Iowa farmland rose 0.7% for the year ending in November, according to Iowa State University’s annual Iowa Land Values Survey. The survey, conducted since 1941 and released today, pegged the average value of an acre of farmland at $11,549 an acre, according to Extension Economist Rabil Chandio who conducts the survey.
After adjusting this year’s result for inflation, the survey finds a 1.8% decline in the value of an average acre of farmland. “With the nominal value up slightly and the ‘real’ value down slightly, that means Iowa farmland values are basically stable,” she says.
She notes this year’s minor increase is the sixth in the past seven years. Last year’s survey saw a decrease of 3.1%.
She comments the percentage change is the key datapoint in the annual survey rather than nominal value. The survey’s strength is indicating direction while nominal values are quite subjective and less accurate.
According to the survey, the value of high-quality farmland rose 0.7% to an average of $14,030 an acre. That’s a gain of $101. Medium-quality ground increased 0.6% to $10,809 an acre – up $69. Low-quality land gained 1.7% to $7,580 – up $130.
On a crop district basis, six report increases while three list decreases. The west and east districts report the gains while the central districts report the declines. The concentration of livestock, which have seen strong revenues, along the Missouri and Mississippi Rivers explains the rise in values. The northwest and northeast districts, with their especially heavy concentrations of livestock saw percentage gains of 2.9% and 4.2%, respectively. The east central district rose 3.4% due to urban influence and livestock.
The central districts list declines of 1.7% to 2.6% with the north central district leading the decrease. The north central and central districts are primarily crop oriented with limited livestock influence.
Looking at data on a county basis shows O’Brien again with the highest value farmland at $16,269 an acre and Appanoose again with the lowest value farmland at $6,679 an acre. There are six counties reporting an average value of more than $14,000 an acre. Five are in the northwest – Lyon, Sioux, Plymouth, Osceola and O’Brien and the remainder is Scott in the east central district.
Key supporting factors for values cited by respondents are: limited supply (21%), strong yields (13%) and cash/credit availability (10%), referring to well established farm owners looking to expand operations. These are the same key factors found in last year’s survey, she says.
Some 42% of respondents report fewer farmland sales occurred this year compared to a year earlier. “There was limited sales activity and there was positive demand for those offerings that did reach the market,” she observes, “so this year’s annual increase in value is not an indicator of a broad-based rise in farmland values across the state.”
Survey respondents list low commodity prices (32%), high interest rates (22%) and high input costs (13%) as the major negatives for farmland values. These are the same key factors listed in last year’s survey, she notes.