Iowa farmland value grows in 2019 but barely exceeds inflation

Posted December 30, 2019 at 5:27 pm

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It’s been a difficult year for farmers — the planting season saw an overabundance of rain and delayed planting, the United States’ trade war with China persisted, skewing both commodity prices and demand, and farm bankruptcies rose to the highest level since 2011. However, favorable interest rates, strong yields, and limited land supply combined to help drive Iowa’s farmland values up for only the second time in six years.

The statewide value of an acre of farmland is now estimated to be $7,432, which represents an increase of 2.3 percent, or $168, since 2018. The $7,432-per-acre estimate, and 2.3 percent increase in value, represents a statewide average of low-, medium- and high-quality farmland.

“The reprieve in the land market, unfortunately, is not driven by a much stronger farm economy,” said Wendong Zhang. Zhang is an assistant professor of economics at Iowa State University and is responsible for leading the annual Iowa Land Value Survey.

“This recent modest increase in land values reflects a lower interest rate environment and slowly improving U.S. farm income. However, we are still faced with significant uncertainty, especially the ongoing U.S.-China trade war which has significantly affected U.S. agricultural exports, especially soybean exports, and leads to lower commodity prices and weaker farm income,” Zhang said.

Stronger-than-expected crop yields in Iowa, and continuing limited land supply helped contribute to the increase in land values, despite low commodity prices. While the growth in land values is a positive, Zhang warned that it should not be labeled as a “solid rebound” of the land market.

Please see this week’s edition of the West Lyon Herald for the full story.