A healthy farm income is credited with pushing Iowa’s economy toward recovery. Creighton University economist Ernie Goss says his latest survey of bankers in Iowa and nine other Midwestern states shows some of the best numbers since January of 2008, but he still sees signs of troubling economic news ahead.
The growth we’re seeing in agricultural land over recent years will not be repeated in the next few years, Goss says. Urban and rural areas are seeing “real issues” with housing. A report last week found Iowa farmland values rose 16-percent in the past year and now have an average price of more than five-thousand dollars an acre. In agriculture-based states like Iowa, Goss says it’s key to watch what happens to farmers and their incomes.
“The farmers are spending,” Goss says. “They’re spending on equipment, they’re spending on new trucks and that, of course, spills over to the rest of the economy.” Goss says 35-percent of the regional bankers who were surveyed this month say they’re concerned about agricultural land prices.
“Land prices in some areas have doubled in the past two years,” Goss says. “Of course, that really represents an economic threat if that bubble should burst. What we’re more likely to see is the air coming out of the agricultural land price bubble.” The land value price hikes in the 1970s eventually led to a bubble that burst in the ’80s, leading to widespread farm foreclosures and an array of other problems.