Iowa farmland values reach record highs

DES MOINES — Iowa farm land has never been more valuable.

The average value of an acre of Iowa farmland increased 17 percent to $11,411 in 2022, according to the Iowa State University Land Value Survey. That is the highest value for Iowa farmland in the history of the survey, which began in 1941.

And when adjusting for inflation, the 2022 average farmland value surpassed the previous inflation-adjusted high water mark set in 2013, according to the survey.

This year’s 17 percent increase in farmland value comes on the heels of a 29 percent jump in 2021.

This year’s increase was driven by high crop prices, limited land supply and low interest rates, an Iowa State University expert said.

“Not only are crop prices much higher, livestock and poultry prices are also significantly higher, translating into higher farm income and profits,” Wendong Zhang, an associate professor of economics and faculty affiliate of ISU’s Center for Agricultural and Rural Development, which conducts the annual survey, said in a statement.

Zhang said inflation drove the 2021 spike in farmland value, but not 2022’s increase. He said the Federal Reserve raising interest rates does not impact farmland value since 81 percent of the land is fully paid for. Instead, land values are high because farmers have cash on hand that they are investing in land, according to a news release.

The value of Iowa farmland has become too high, many survey respondents said: 70 percent said farmland values are too high or way too high, according to ISU. That can create a barrier for beginning farmers, Zhang said.

“The higher land values do create an even higher entry barrier for beginning farmers, and the following increase in cash rents along with higher input costs could negatively affect producers, especially those with a lot of rented ground,” Zhang said in the statement.

The last two times Iowa farmland values hit record highs, they were followed by precipitous drops.

Using inflation-adjusted figures, after surpassing $6,000 per acre in the early 1980s, farmland values plummeted to below $2,000 per acre by the end of the decade, according to ISU data.

And after climbing back to nearly $9,000 per acre in 2013, values dropped below $7,000 per acre over the next decade.

The 2022 Land Value Survey used responses from 443 agricultural professionals knowledgeable in land market conditions, such as appraisers, farm managers and ag lenders, as well as land sales information, according to ISU.

Comments: (515) 355-1300, erin.murphy@thegazette.com