A survey shows the value of Iowa’s farmland has dropped for the first time in a decade. The survey from the Iowa Farm and Land Chapter of the Realtors Land Institute shows farmland values declined by 7.6% in the past six months.
Spokesperson Troy Louwagie says the dip follows a five-year period during which Iowa farmland values increased by more than 70%. "If you look at any investment, there aren’t many that have kept up or even come close to increasing 70% over the last five years," Louwagie said. "So, we all believed we were probably due for a correction."
The last time farmland values dropped in the state was September 1999. Louwagie credits a number of factors for the change in direction. "Lower commodity prices, higher input prices (for farmers), volatility in the stock market and declining confidence overall in the world economy set us up for the corrections (in land values)," Louwagie said.
The land institute splits Iowa into nine districts for the survey and all showed drops in value. West-central Iowa experienced the largest decrease at 14%, while northwest Iowa’s land values dropped 11.5%.
North-central and northeast Iowa also had big dips. Louwagie says those areas of the state had reported some of the big increases in land value in recent years. "Five or six years ago, that’s where the ethanol plants and livestock buildings were starting to grow," Louwagie said.
"That caused higher commodity prices and land values in those areas…which is probably why they had some of the higher decreases."
Corn and soybean prices hit record high levels last summer, but have since dropped off more than 50%.