The latest survey of farmland values from the Iowa State University Extension department released today (Tuesday), shows the average value of an acre of Iowa farmland increased by 290 dollars — or 10 percent — to set a new record high. Economist Mike Duffy says it’s the fourth-straight year the survey found record price per acre.
Duffy says the average value for an acre was $3,204, and Scott County land sold for $5,073 dollars an acre — the highest price ever in the history of the survey. Duffy says all types of farm ground saw increases. Duffy says low-quality land was at $2,195 dollars an acre, a record and the first time it was over two-thousand dollars. Medium quality was at $3,011, a record and first time over three-thousand dollars an acre. High-grade ground was at $3,085 an acre.
Duffy says investors drove up the price of land in the past several years, but says ethanol and the demand for corn is behind the record this year. Duffy says the number one factor behind land purchases was the increase in grain prices, and Duffy says an interesting thing this time is that there was an increase in farmers purchasing land and a decrease in investors. Duffy says much of the increase in land values came in the last six months.
Scott County held onto its traditional spot with the highest land value. Duffy says much of the reason for the high price land in Scott County is the low cost of transporting grain straight to the Mississippi River. But, Duffy says there’s starting to be an increase in land values in areas where there’s an ethanol plant that uses the grain produced on the land.
While the higher prices are good for those who own land, Duffy quotes a colleague who says the increases are a mixed blessing. Duffy says the not so good news comes for beginning farmers who will have more trouble buying land. Duffy says there will also be pressure to increase rents on farmland. Duffy says there are some similarities between the latest land value increases and the increases in the 1970’s that eventually led to the farm crisis.
But, Duffy says the land values now are not increasing at the rapid pace they did in the 70’s and the increase in cost is supported by an increase in prices farmers are getting for the grain they grow on the land. To see the entire survey, surf to: www.extension.iastate.edu/landvalue/.
Related web sites:
Land values survey results