Farmland values continue gradual decline

Farmland values in Iowa, Kansas, Nebraska, South Dakota and Wyoming continued a slow steady decline in the second quarter of this year, according to a survey by Farm Credit Services of America.

Iowa has experienced the greatest decline in average farm values - about 20 percent since the market's peak in 2013.

Fourteen Iowa benchmark farms declined 4 percent in value during the first six months of 2016, while seven showed no change. Omaha, Neb.-based FCSAmerica said the average sale price for Iowa cropland has reached a five-year low, but average land quality continues to be at historically high levels.

Demand for farmland also is down across the five-state region.

Public land auctions declined 8 percent in the first six months of 2016 compared with the previous year. The percentage includes public auctions in Iowa, Nebraska, South Dakota and Wyoming, as well as Kansas, where FCSAmerica works in alliance with Frontier Farm Credit to monitor farmland values.

Lower farm incomes and per-acre profitability, due to a sharp decline in corn, soybean and wheat prices, continue to put downward pressure on farmland values, according to FCSAmerica. The survey results mirror those of recent surveys by Farmers National Co., the Iowa Chapter of the Realtors Land Institute and the Federal Reserve Bank of Chicago.

The average sale price of an acre of high quality Iowa farmland (at least 85 percent tillable) slipped $32 from $8,100 in March 2016 to $8,068 in June 2016. The decline has been much sharper since the third quarter of 2013 when an average acre of high quality Iowa farmland sold for $10,050, according to FCSAmerica.

Troy Louwagie of Hertz Farm Management in Mount Vernon said a brief commodity price rally in the second quarter of 2016 provided some hope that a turnaround was in the making.

'We actually had a couple of auctions two weeks ago where land sold fairly well,” Louwagie said. 'But now, within the last two weeks, corn and soybean prices have dropped off again and definitely gone lower.

'I think with these commodity prices, you're going to see land prices soften a little more.”