Fort Dodge Messenger, IA
06-30-06
Farm demand for land exceeds available of farmland in Iowa on Nov. 1, 2005, was $2,914
per acre, which is a 28 percent increase for the past
sales
By KRISTIN GREINER- Farm News staff
The farmland real estate market seems to be
holding steady, although the demand for land
continues to outweigh the amount of land actually
available.
Sam Kain, the regional sales manager for
National Farmers Company covering Iowa and
Missouri, said there has been a slow down in the
1031 exchange money used to purchase land in
years past. First put into the tax code in 1918, the
1031 exchange is part of the federal tax code that
allows someone to defer the taxes—generally
capital gains—from the sale of land or other assets
if they quickly invest the proceeds in similar types
of assets.
Still, the prices pegged for farmland continue to
hold strong, as do rental prices set for farmland.
“With the fuel prices, people are wanting a better
return,î he said.
Larry Hill, area vice president for National
Farmers Company based in Eagle Grove, said most
land rentals have held strong in the past two years,
thanks to profitable crops.
“That always reflects the demand for land and
right now, land prices are still steady, especially on
really good farms,”î he said. “There might be a bit
of a problem with farms that are chopped up into
smaller fields, but there is a lot of demand for those
farms that are one field with 160 acres, for
example. There’s a lot of interest in well tiled,
productive farms.î”
The 2005 land value survey from Iowa State
University Extension shows that in 2004 and
2005, the statewide average increased more than 10
percent annually. The estimated average value
two years.
Iowa State University Extension numbers show
that cropland rental rates have also steadily
increased over the past few years, but not at the
same rate, reported Tim Johnson, a research analyst
with the Iowa Farm Bureau Federation.
“The reported state average for cash rent in 2005
was $135 per acre, up from $129/acre in 2003, an
increase of 4.7 percent over the two year period,Ӕ
Johnson said.
In the past, quite a few outside parties sought
farmland in Iowa, but Kain said that has slowed
down, too. Most of the interested people are
farmers trying to expand their operations, and who
are big enough to tackle more land, Hill said.
“They’re the farmers that have enough
machinery to take on another 320 acres,Ӕ he said.
There is still interest from producers seeking
land for livestock expansion, but Hill said it’s
coming mostly from Iowa producers and not
outside parties.
“There’s individuals stopping in to see us and
other farmers around who want to put one to three
buildings on five acres and then get the manure
rights, since fertilizer prices have gone up so much
and manure is being sought after,”î he said. “In
northern Iowa and southern Minnesota, there’s a lot
of expansion going on in the hog industry. It’ll be
interesting to see what happens in the next couple
of years with the ethanol plants, we could see a
resurgence in the cattle industry.”