Brownfield, MO
12-20-06
Iowa farmland values surge to record high
by Peter Shinn
The value of Iowa farmland is higher than it's ever been, increasing $290 from
last year to $3,204 an acre on average. That's according to the annual survey of
land values released Tuesday by Iowa State University (ISU).
ISU ag economist Dr. Mike Duffy told Brownfield higher corn prices driven by
ethanol are the main reason for the surge in land values. "The primary driver is
the increase that we've seen in grain prices," Duffy said. "Most of the increase
that we've seen has just been within the last couple of months and grain prices
are leading the way."
And Duffy said the rapid increase in farmland values isn't just restricted to Iowa.
"Nebraska, Iowa, Missouri, Minnesota, South Dakota, we're all seeing this level
of activity and demand for grain, and that's being translated into higher prices,"
Duffy said.
Only Illinois, Duffy said, may not have seen a similarly rapid increase in farmland
values, mainly because urban investors have already run up land prices there. "I
think part of that is due to the fact that they were much stronger when the
investors were active, investors particularly out of Chicago," Duffy explained. "As
that's changed, as the urban market's slowed down a little bit, I think it slowed a
little bit the Illinois rate of increase."
Indeed, Duffy said ISU's analysis of its survey data indicated an increase in
farmland transactions between ag producers in the Hawkeye State. "What we've
seen over the last several years has been a much stronger level of investment
interest," said Duffy. "Farmers continue to be the majority of the purchasers, but
they were dropping off relative to investors increasing, and this is the first year in
several that we've seen that trend reversed."
Duffy said his primary worry relative to the rapid increase in farmland values is
the impact higher land prices might have on young and beginning farmers and
ranchers. "One of the bigger concerns I have as director of the [ISU] Beginning
Farmer Center is that this is going to continue to make it more and more difficult
for beginning farmers to have access to land," he said.
But Duffy said that's about the only negative he could identify about the quick rise
in land values. "It's a two-edged sword," Duffy said, "but it's hard to argue that
increasing values aren't good."
ISU estimates the total value of Iowa farm land at a record-high $105 billion.
Scott County in eastern Iowa had the highest average farm ground price for any
single county, with an average per acre price of $5,073, a record average county
price. The Northwest Iowa crop reporting district saw the highest average farm
land values overall for any one district, with an average per acre value of $3,783.