Iowa farmland values soaring, survey finds

DES MOINES — Iowa farmland value jumped 29 percent this year to an average statewide value of $9,751 per acre — the highest such value recorded by Iowa State University since it began its survey in 1941

The average nominal land value is 12 percent higher than the 2013 peak, though when adjusted for inflation the land values statewide are still below that year’s high. However, for 20 Iowa counties, the value when adjusted for inflation is higher.

The last time farmland values increased more than 25 percent in a year was in 2011, when values rose 32.5 percent due to surging ethanol demand and high commodity prices.

"The increase this year is in part due to much stronger commodity prices thanks to higher exports, stronger than expected crop yields and strong ad hoc COVID-19 related government payments," said Wendong Zhang, an associate professor of economics at Iowa State's Center for Agricultural and Rural Development.

Zhang leads the ISU annual Land Value Survey, which found that the average statewide value of an acre of farmland rose by $2,193 an acre since last year. The land values represent a statewide average of low-, medium- and high-quality farmland.

While all 99 of Iowa's counties showed an increase in land values, Scott County reported the highest value of $13,852 an acre and Decatur County the lowest value at $5,062.

Linn County showed an average of $11,560 and Johnson County showed an average of $11,118.

The survey is based on reports by agricultural professionals knowledgeable of land market conditions, such as appraisers, farm managers, agricultural lenders and actual land sales.

While the respondents pointed to the positives driving prices upward, the ISU research found they nonetheless were concerned about higher costs for inputs like seed and fertilizer, the sustainability of such high land prices, possible changes in interest rates and political uncertainty over policies affecting agriculture.

“In general,” Zhang wrote in the report, “survey respondents are very optimistic about the strength of the future land market with 80 percent of respondents forecasting a continued increase in Iowa land values.”

Previous research by ISU’s Center for Agricultural and Rural Development has found that:

Zhang’s report noted that Inflation concerns have been driving some investors to consider farmland as an alternative asset “because farmland value tends to rise with higher inflation.“