Iowa farmland values stabilizing

A softer agricultural land market is expected to continue this year, along with depressed commodity prices, according to Farmers National, an Omaha, Neb., farm and ranch real estate company with an office in Iowa City.

Values for high quality farmland appear to have stabilized, while lower quality land values continue to decline. Iowa saw an 8 percent decrease in the value of high quality land in 2015, according to Sam Kain, national sales manager for West Des Moines-based Farmers National.

'The outlook for 2016 will depend on how much land is put out on the market,” Kain said. 'There's still a strong demand for high quality land, but with a small supply, the market should remain stable.”

The average sale price of an acre of high quality Iowa farmland was $10,100 this month, down from $11,000 in January 2015, according to an Farmers National agency survey.

'Lower grain and livestock prices are a major factor in the current measured decline in land values,” said Randy Dickhut, vice president of real estate operations for Farmers National, in a news release. 'As net farm income continues to fall from the 2013 peak, we expect to see this trend in many agricultural regions of the country.”

Net farm income in the United States in 2015 is expected to show a drop of 38 percent to $55.9 billion from $90.4 billion in 2014, the largest one-year decline since 1983, according to the U.S. Department of Agriculture.

Dickhut said price stabilization will carry over into 2016 for some regions, as landowners hold on to high-value land. The supply of land available for sale increased slightly during the last quarter of 2015, but remains lower than normal.

Kain said cash rents have been under pressure in Iowa since 2014, gradually lowering as corn and soybean prices have declined. He said farmers looking to expand their operations are helping spur strong land sales.

'Farmland doesn't change hands often, so when farmers have the opportunity, they try and get it,” Kain said. 'They may not have another chance in their lifetime to buy that farm.”