Iowa farmland values up for quarter, down for year

The value of an average acre of 'good” Iowa farmland edged up 2 percent in the first quarter of 2015 relative to the fourth quarter of 2014, but fell 6 percent over the last year, according to the Federal Reserve Bank of Chicago.

Cash rates to lease farmland decreased 10 percent in Iowa in 2015. The decline provided some relief in rental costs for farmers facing much lower corn and soybean crop prices than in recent years.

The Seventh Federal Reserve District includes Iowa, Illinois, Indiana, Michigan and Wisconsin. First quarter values for good farmland ranged from an increase of 2 percent in Iowa to a drop of 1 percent in Illinois.

Demand to purchase farmland was weaker in the three- to six-month period ending with March 2015 compared with the same period ending with March 2014. The amount of farmland for sale, the number of farms sold, and the amount of acreage sold all were lower during the winter and early spring of this year compared with a year ago.

David Oppedahl, senior business economist with the Federal Reserve Bank of Chicago, said the dip in farmland values over the last year is directly related to the decline of corn and soybean prices.

'For 2014, Illinois, Indiana, and Iowa had corn and soybean sales make up 95 percent, 93 percent, and 96 percent, respectively, of total crop revenues, whereas for Michigan and Wisconsin, these percentages were 54 and 63, respectively, according to data from the U.S. Department of Agriculture,” Oppedahl said in a news release.

'Corn prices were down 16 percent and soybean prices were down 28 percent in March 2015 compared with a year earlier. So, naturally, the states with a greater dependence on corn and soybean revenues would face more downward pressures on their farmland values.”

Almost half of the survey respondents predicted farmland values will decrease in the second quarter of 2015, while less than 1 percent expected farmland values to increase and 51 percent expected them to be stable.