Value of average acre of Iowa farmland falls

Monthly cash rent paid by farmers dips from 2015

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Farmland values and cash rent paid by farmers have fallen in 2016 as the nation’s agricultural sector struggles with low commodity prices.

The value of an average acre of Iowa farmland slipped 2 percent to $8,000 in 2016, from $8,200 per acre in 2015, according to data from the U.S. Department of Agriculture’s National Agricultural Statistics Service.

Cropland prices climbed to $8,750 per average acre in 2014 before sliding to $8,200 per acre in 2015.

The amount of good farmland for sale, the number of farms sold and the amount of acreage sold were all down during the winter and early spring of 2016 compared with a year ago, according to the Federal Reserve Bank of Chicago.

Iowa is home to some 88,000 farms, with 97 percent of them owned by families, according to the Iowa Farm Bureau.

David Oppedahl, Federal Reserve Bank senior business economist, said bankers responding to a survey expect agricultural land values to continue falling. They cited lack of demand and the amount of good farmland for sale.

Cash rental rates paid by Iowa farmers also dipped in 2016 for the second year in a row, according to a survey by the USDA.

Non-irrigated cropland cash rent paid to Iowa landlords in 2016 averaged $235 per acre, down from $250 per acre in 2015 and $260 per acre in 2014. Irrigated cropland rent averaged $240 per acre in 2016, down from $260 per acre in 2014.

“Cash rental rates for Seventh Federal Reserve District farmland experienced a significant drop of 10 percent for 2016 compared with 2015 — even larger than the decrease of last year relative to 2014,” Oppedahl said.

Average annual cash rates to lease farmland, he reported, were down:

l 10 percent in Iowa

l 9 percent in Illinois

l 10 percent in Indiana

l 2 percent in Michigan

l 7 percent in Wisconsin.

Agricultural credit conditions, Oppedahl added, were weaker in the first quarter 2016 compared with the first quarter 2015. Sixty-eight percent of the bankers responding to the survey reported lower rates of loan repayment.

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