The value of an average acre of good Iowa farmland has fallen for the third consecutive year, the first time that has happened since the 1980s farm crisis.
The 2016 Iowa State University Land Value Survey estimated the value of an average acre of crop land at $7,183 — $450, or 5.9 percent, lower than November 2015. The survey was conducted in November by the Center for Agricultural and Rural Development (CARD) at Iowa State University and Iowa State University Extension and Outreach.
Farmland values hit a historic high of $8,716 an acre in 2013, but have declined 17.5 percent since then. The statewide average value for an acre of farmland dropped 8.9 percent in 2014 and 3.9 percent in 2015.
Scott County reported the highest value of $10,335 an acre, a decrease of $583 per acre, or about 5.3 percent, from 2015. Decatur County reported the lowest value per acre at $3,443, a loss of $71, or about 2 percent.
Linn County was at $8,578 this year, down from $9,093 or 5.66 percent, in 2015. Johnson County was $8,636, down from $9,114, or a decline of 5.25 percent, from last year.
Results from the ISU survey are consistent with those of previous surveys by the Federal Reserve Bank of Chicago, the Realtors Land Institute and the U.S. Department of Agriculture.
“The golden era of phenomenal, yet abnormal, growth in farm income and land values, as we saw from 2006 to 2013, is already behind us,” said Wendong Zhang, assistant professor of economics at Iowa State University, in a news release.
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“The land market is going through an orderly adjustment while the agricultural sector, a competitive industry, is trying to adjust to the old normal of zero industry-wise net profits.”
Zhang, who led the annual survey, said pessimists have reasons to worry, especially landowners and/or producers who are overleveraged in terms of debt.
“For an optimist, this decline still is modest, and the probability of a replay of the 1980s farm crisis is low,” Zhang said. “The likelihood of another farm crisis is low due to steady farm income accumulation before the downturn, a stronger government safety net, and an overall lower debt level in the agriculture sector.”
Zhang said survey respondents expect land values to continue to trend lower for the next year or two,
“This is consistent with the stagnant corn and soybean futures prices and potential rise in interest rates,” he said. “Many respondents to the survey are hoping for the market to rebound in three or four years.”
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