Iowa farmland values decline in last 6 months

The value of an average acre of bare, unimproved Iowa farmland fell 3.4 percent from March 1 through Sept. 1, according to a survey by the Iowa Chapter of Realtors Land Institute.

More than 600 specialists in farmland were asked to estimate the average value of cropland as of Sept. 1. Kyle Hansen, past chapter president, said roughly 300 provided responses for the survey, which is conducted every six months.

'For the year between Sept. 1, 2013, and Sept. 1, 2014, the average value of an unimproved acre of Iowa farmland decreased 8.8 percent,” Hansen said Wednesday as the latest survey was released in Cedar Rapids. 'Northeast Iowa had the largest annual decrease at 13.6 percent.”

Hansen attributed the decline in farmland values to several factors, most notably the sharp drop in corn and soybean prices.

'We have seen a dramatic decrease in commodity prices since the first of the year,” Hansen said. 'If we were to go back to a year ago, prices would be down about 40 percent from what they were then.

'We have lost a significant amount of revenue for our farm operators.”

Hansen said farmers with cash on hand still are bidding on farmland at auctions, but they are conservative with regard to how much they are willing to offer. He said there are instances where livestock farmers are willing to pay what it takes to purchase a particular piece of farmland.

Hansen said investors are beginning to reappear at auctions as farmland values soften, and there is a lack of stable alternative investments, particularly the nation's stock market.

All but two of Iowa's crop reporting districts posted declines in farmland values. South-central Iowa cropland edged up 0.2 percent over the last six months, and southeast Iowa farmland rose 3.1 percent in value.

Hansen said the outlook for the next six months appears to show more softening of farmland values. He said commodity prices do not appear poised for a significant rebound, especially in light of the forecasts for a record corn crop and bumper soybean crop.