The annual farmland survey released earlier this month by Iowa State University showed a record average cost of land at $8,296 an acre. ISU economist, Mike Duffy, who conducts the survey, says most of the purchases are by those who want to expand.
He says the buyers are typically neighbors or those in the neighborhood, as the vast majority of those buying land are inside Iowa. Duffy says farmers see the high return in corn and soybeans as a reason for investing in more land.
“What we’re seeing is a continuing increase in the amount of land that’s going to farmers and a decrease in the amount of land going to investors,” Duffy explains. “And that’s I think due to the fact that farmers are the ones making the money off the land right now. Farmers view land in a different way, and so they are in the market much stronger now than the investors are.”
Duffy says there is more transfer of land by inheritance right now than by sale, but he says the higher prices have made some of those who inherit land decide not to keep it.
“I think that’s particularly for non-farming heirs that have inherited. They are looking at the land and saying we would have held onto it with it at two or three-thousand dollars and acre, but with it at eight or nine-thousand dollars an acre, the price of sentimentality went up. We are seeing more activity from that group,” Duffy says.
The annual survey from Iowa State University showed farmland values increased almost 24-percent over last year.