Despite lower commodity prices and demand, delayed planting and higher farm bankruptcies, an Iowa State University survey shows an average acre of Iowa farmland increased in value this year.
The value of an average acre of Iowa farmland is estimated at $7,432, up 2.3 percent or $168 from $7,264 in 2018.
In east central Iowa, the average value of an acre of farmland rose 5.9 percent to $8,475 from $8,004 in 2018.
Favorable interest rates, strong yields and limited land supply combined to help drive Iowa’s farmland values up for only the second time in six years.
Dr. Wendong Zhang, ISU assistant professor of economics who is responsible for leading the annual Iowa Land Value Survey, said the reprieve in the farmland market is not driven by a much stronger farm economy.
“We are still faced with significant uncertainty, especially the ongoing U.S.-China trade war, which has significantly affected U.S. agricultural exports, especially soybean exports, and lead to lower commodity prices and weaker farm income,” Zhang said.
(See related articles on pages 1A and 6B on the U.S.-China trade dispute.)
While the growth in land values is a positive step, Zhang cautioned that it should not be considered a solid rebound of Iowa’s farmland market.
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“The Market Facilitation Program payments helped soften the blow and stabilize farm income and the land market,” Zhang said in a statement accompanying the survey results.
Zhang said the future farmland market will depend on the pace and speed of Federal Reserve moves on interest rates, progress in the trade talks and the availability of land for sale.
Also adding to uncertainty about the agriculture economy was a sharp increase in farm bankruptcies, to 580 in 2019 — the highest since 2011.
While the overall share of bankruptcies remains low, Zhang said there are more farm operators under financial stress due to continued low commodity prices.
Eighty-two of Iowa’s 99 counties reported higher estimated land values and 17 saw a decline.
The 2019 Iowa State University Land Value Survey was conducted in November by the Center for Agricultural and Rural Development and Iowa State University Extension and Outreach.
The survey results were consistent with surveys by the Federal Reserve Bank of Chicago, the Realtors Land Institute, and the U.S. Department of Agriculture.