Land Rush: How Iowa farmland value, demand shapes rural communities

It's the story we all think we know: Population in most rural communities is declining, negatively impacting the local economy and quality of life.

But for some communities - primarily those whose residents commute to larger metro areas for work - the reality is more nuanced.

Take Quasqueton (pop. 554), where population has been slowly and consistently declining since 1980 - a loss of about 50 people over the past 35 years.

Quasqueton Mayor Chad Staton told us earlier this summer that he knows for a fact more people would move to his town, if they could.

'I also own rental properties in town,” he said. 'I don't have problems keeping them filled. In fact, I have a waiting list of people who'd like to live here.”

But where?

Homes to rent or buy are scarce. Smaller properties within the town do occasionally come on the market; there is, for instance, a .37-acre vacant lot for sale at the time of this report.

But most people looking to buy or build in a commuter town are looking for larger lots - an acre, if not two, especially since their housing budget can generally stretch further in a rural community. The same is generally true for renters.

The town's primary residential district is bordered on one side by the Wapsipinicon River. To the north, east and south, it's hemmed in by farmland.

'The people who own that farmland aren't interested in selling,” Staton said, making town expansion a near impossibility.

In recent decades, changes in Iowa agriculture also have put another kind of squeeze on Iowa's smaller towns.

Adjacent farmland was once populated by smaller, local owner-operators who were fully integrated into community life and the local economy. As those farms have been sold or otherwise consolidated into fewer, larger operations, that population base, and economic partnership, has eroded.

ECONOMIC CHANGES

Iowa farmland always has been a prized possession. The rich soil is what drew settlers to the area. Wars were fought over it. Agriculture is part of our a lifeblood. It is the first thing - sometimes the only thing - outsiders know about our state.

Agriculture is responsible for more than a quarter of the state's economy, so even small shifts in markets and values create tremors throughout the state economy. Over the past generation, consolidation of agriculture and related industries has been more akin to a seismic shift, altering the rural landscape - and the small towns that dot that landscape - in fundamental ways.

'A great deal of the local economy that once existed in smaller, rural communities is simply no longer there,” says Gary Taylor, a planning and development specialist with Iowa State University Extension and associate professor in community and regional planning. 'For instance, the local banker that once was an active member of a civic club or the chamber is no longer attending meetings because the local bank isn't there. He spends a good part of his day commuting to his office in the neighboring larger community.”

As far-fetched as it may seem to connect the dots between the global economy and a mom-and-pop general store in rural Iowa, that's the complicated path that explains the vicious cycle encompassing many Iowa small towns. And it isn't a singular journey that always begins at the same point, but one as varied as the towns it has traveled through.

GET BIG OR GET OUT

In 1954, a Purdue University graduate who had grown up on an Indiana dairy farm was named Assistant Secretary of Agriculture by President Dwight D. Eisenhower. Although Earl Butz served for only three years as an assistant, he took the USDA's top position in 1971, an appointment by President Richard Nixon. He remained as USDA head until 1976, crafting policy that set the stage for consolidation of the commodities Iowans grow best.

He advocated and encouraged a radical shift away from matching supply to demand for price regulation, demanding farmers 'get big or get out” by planting crops like corn 'from fencerow to fencerow.” Iowa farmers and corporations took him at his word.

Farms expanded and related industries provided new technologies to aid the advancement of higher yields and less labor-intensive practices. Farms grew even larger - as did the farmers' debt as interest rates soared in the late 1970s.

When commodities produced in 1980 far outstripped demand, farmers defaulted on their loans. Small towns that had been especially dependent on area farmers evaporated overnight. Banks failed. Workers were set adrift.

Medium-sized farms, especially those owned by newer farmers, were hit the hardest, but farms of all sizes were devastated. When the dust of the farm crisis settled, many larger farms had grown even larger, having purchased land in default.

In 1950 the average size of an Iowa farm was 169 acres, and there were about 206,000 of them across the state. By 2005, average farm size had increased to 355 acres, and only 89,000 farms remained. The number of actual operators is much smaller, as larger operators tend to rent cropland from multiple farms. Today, about 62 percent of Iowa farmland owners do not farm.

CHALLENGING TRENDS

More than half of Iowa farm land, according to state-mandated reporting, is now owned by people over the age of 65. And about 21 percent is owned by someone who lives in a different state. About 50 percent of the land is owned by someone who does not live on it. And, of those owners who live full-time in Iowa, only 10 percent choose to live in towns with a population below 2,500. In contrast, 13 percent live in cities with a population of 50,000 or more.

Ownership patterns for farmland also are changing, with more and more tracts being placed in trusts - legal instruments that hold ownership of land during the life, or after the death, of the landowner. About 5 percent of Iowa farmland is held by multiple entities - two trusts, two corporations, one trust and one person, or some other combination of owners.

Each year, between 1 and 2 percent of available farmland changes hands, and a quarter of that limited amount is transferred through inheritance. Although land values have dipped over the past 18 months alongside commodity prices, prime Iowa land still holds a hefty price tag that is often prohibitive to cash-strapped small communities, developers and beginning or smaller farmers.

Fewer local farmers directly translates to lower investment in small towns and local businesses. Few developers are willing to risk the slimmer profit margins rural development can yield. As a result, it's not unusual in smaller Iowa towns to see downtown storefronts that have been converted to lower-end rental properties. It's a sight that flies in the face of most people's visions of idyllic small-town community life, and can further erode a town's ability to attract new residents.

Growth and development of any community is a delicate dance between local officials, land owners, citizens and developers. Through strategic planning, local officials can pave the way for specific types of future development. Developers can produce efficient plats to keep sprawl in check. But even the best-laid plans must sometimes wait.

WHAT'S THE ANSWER?

About two decades ago, leaders in West Branch knew their community needed to expand, so they set zoning standards and established preliminary access to a targeted area. Agricultural interests at that time, however, were not interested. Eventually, when the land ownership was passed to the next generation, remaining family members were interested in selling. A developer saw the potential. Homes have been built near the town's new high school and more are underway.

Maybe, in a few years, Quasqueton will have a similar opportunity.

Renewed American interest in organic and other niche production methods has prompted some groups to take aim at agricultural trends set in motion during the 1970s. Many would like to see more families living on the land they farm, which could once again spur community interest in rural towns and more economic support of small-town businesses.

Others have proposed closer-knit rural housing developments that offer shared green space in lieu of individual sprawling lawns. It is important, they say, to balance housing against a moral obligation to use Iowa's fertile land to produce food.

Local-to-local economies are another option, with some envisioning places where many consumables are produced, processed and sold locally. Agritourism - or bringing visitors to farms to reconnect them with the livestock, soil and related products - is considered a win-win for rural communities since it serves as both an economic and relevancy boost.

None of these, however, are magic bullets. It's very likely that what works for one community won't work for another. But nearly everyone, including Secretary of Agriculture Tom Vilsack, knows sitting still is no longer an option.

'It's time for us to have an adult conversation with folks in rural America,” Vilsack said during a 2012 forum. 'It's time for a different thought process here.

'Why is it that we don't have a farm bill? It isn't just the differences of policy. It's the fact that rural America with a shrinking population is becoming less and less relevant to the politics of this country, and we had better recognize that and we better begin to reverse it.”

Next week: Some possible solutions to ag-related effects on small-towns.

' Comments: editorial@thegazette.com; (319) 398-8469