Cow in a pasture. (ISU photo)
Survey information released from the U.S.D.A. shows a big increase in farmland values and cash rent. Iowa State University livestock economist, Lee Schulz, says the cropland increased 19.7%.
“And that’s the highest that we’ve seen since 2011 and 2012. When you look at pasture land values, they’re up a little over nine percent,” he says. Schulz says this is one set of numbers in the overall picture. “I would put this as, as one data point, you know, among many, when we look at, you know, understanding what farmland values and cash trends are Iowa State, for example, does surveys have both values and rents,” he says, “there’s the Federal Reserve Bank, and those branches do those. So, you know, I think it’s important always to take all the information available.”
He says high commodity prices are one of the big drivers of land values. “You know as we look at what you can make off that ground — certainly looking at corn and soybean prices. Also remember that interest rates have been really historically low, now we’re starting to see those increase at those low interest rates, all else equal, that helps support land values,” he says.
Schulz specializes in livestock and says that industry is having an impact on pasture land values. “I think it maybe doesn’t get necessarily the attention that the cropland values do. But pasture land is very much going to follow the cattle cycle. And so as we look at the downturn of the cattle inventory, and we’re starting to see higher prices and expectation of higher prices for cattle in the years to come, that’s certainly going to be supportive of pasture land values,” Schulz says.
He says as the commodity prices rise there’s competition for that land. The Fed Reserve recently raised interest rates again and Schulz says that is going to continue to impact land values along with the other factors. “It’s setting up to be a very dynamic market, on what we’ll see these land values do in the year and years to come,” Schulz says. Iowa State releases its annual land value survey in December.