Mike Duffy
The Iowa farmland values survey released last week by Iowa State University’s Center for Agricultural and Rural Development showed the first drop in values since 1999. Retired ISU economics professor Mike Duffy says that drop broke the upward trend in prices, but another standard of land ownership didn’t change. “Basically we’ve saw a continuation of the trends we’ve seen, and that’s existing farmers are the primary purchasers,” Duffy says.
Duffy says investing in Iowa farmland hasn’t pushed out gold or the stock market for those outside of farming hoping to make some money. “We had seen in the early two-thousands investor interest rising relative to existing farmers, but since about 2004, 2005, we’ve seen the existing farmers being the primary ones in the market,” Duffy says. “So most of Iowa’s land is owned by someone actively farming it, or someone who has in the past.”
Duffy says the sales data from farmland shows mostly transactions from “Iowa to Iowa.” “You can have some outside investors that have Iowa holdings, but it’s not as much as you might see in some of the surrounding states,” Duffy explains. He says part of the reason land doesn’t replace other investments, is that it takes ongoing work to reap the rewards. “I think sometimes people want to use just short-run points of view on the land market. Land is a long-term investment, it’s an investment that people buy for a variety reasons, not just income,” Duffy says. “We’ve seen probably close a fifth of the land — 20 percent — is owned for sentimental reason.”
Duffy has tracked the farmland values for 28 years and says those who operated farms for their livelihood have had a lot to keep track of recently.”You know the last few years have probably been some of the most unusual where we saw the big run up in values, massive changes in corn prices, and it’s been an interesting time,” Duffy says.
Duffy started tracking land values as the state was coming out of the farm crisis and big drop in prices in the late 1980’s. He think’s this year’s drop in prices is a correction in values related to commodity prices falling, and doesn’t think values will continue to drop like they did back in the 80’s. Duffy has retired from ISU and says this is likely his last year working on the farmland survey.