Farmland market stable despite predictions

The market for farmland is stable, despite economists' predictions that farm income and land values would drop this year in Iowa and other Midwestern states.

Farmers National Co., with an office in Iowa City, recorded strong real estate sales for the first half of 2014, down slightly from record average sale prices experienced in 2013. In Iowa, the average value of good farmland is $12,250 an acre, down from $12,500 last year at this time.

Larry Greiner of Farmers National said two recent farmland auctions show the wide variance of prices that land is fetching at auction.

'We sold 80 acres in Sioux County on Monday for $20,400 an acre,” Greiner said. 'There were four bidders when the price reached $18,000, so that was an aggressive sale.

'On Tuesday, we sold a farm south of Lone Tree with a corn suitability rating of 65 for $7,500 an acre.”

Greiner said the average farmland sale price in Iowa is steady to 10 percent lower compared with this time last year.

'If we can hold the corn market at $4.50 per bushel or better, I don't think we will see a huge dropoff in land values in the near future,” Greiner said. 'If this goes on for a couple of years, we will see people start looking at values a little harder.”

The average value of a good acre of Iowa farmland declined 5.4 percent to $11,104 between Sept. 30, 2013, and March 31, 2014, according to a survey released in April by the Iowa Chapter of Realtors Land Institute.

While a number of factors were listed as contributing to the moderation of Iowa farmland prices, Troy Louwagie of Hertz Farm Management in Mount Vernon said the primary reason was the drop in commodity prices.

'There are a lot of farmers who had some pretty good years when corn prices were at $8 a bushel,” Louwagie said.

While conceding that corn prices are lower, Randy Dickhut, vice president of real estate operations for Farmers National, said farm incomes actually were stronger than expected going into 2014.

'Original income projections of 20 percent below last year were not realized,” Dickhut said. 'Commodity price drops boosted worldwide demand for U.S. exports, resulting in higher grain prices than initially thought.

”Market factors aligned to create an optimal situation for our industry. We continue to see a strong land market.”