Favorable results were found in the Iowa State University Land Value Survey recently conducted by the Center for Agricultural and Rural Development, according to a news release.
The majority of Iowa farmland increased in value in 2019, despite the challenging year for farmers.
The survey was conducted by agricultural professionals who exhibit a knowledge of land markets. The intent of the survey is to provide people with an understanding about the things impacting Iowa’s land market.
The average value of land in Iowa is now $7,432 per acre. This is a 2.3 percent increase from 2018.
According to the United States Department of Agriculture (USDA), determining farmland value includes both economic and parcel-specific aspects of the land. Things like interest rates, soil-quality or yield levels are all taken into account when assessing land value.
In the Corn Belt region, farmland is more valuable than anywhere else in the country. While both cropland and pastureland are considered, cropland is usually more valuable.
The USDA also notes that as farmland value rises, farmers experience different results based on whether they own or rent their land. For example, owners tend to purchase more farmland when value is higher. On the other hand, renters will be faced with higher rent charges due to the more valuable land.
Wendong Zhang, assistant professor of economics, has given insight about the increase in value. In the news release from Iowa State Extension and Outreach, Zhang explained how farmland can be evaluated.
“This recent modest increase in land values reflects a lower interest rate environment and slowly improving U.S. farm income,” Zhang said in the news release.
He said this should help stabilize the farm income in the future.
While the increase is encouraging to farmers, Zhang also pointed out in the news release that Iowa agriculture still faces a lot of uncertainty. Zhang said our exports have been affected negatively, especially during the trade war with China. Farm income has the potential to weaken, which would lead to less valuable farmland.
In addition to trade with other countries, there are also domestic factors that negatively impact farmland value. Things like lower commodity prices, tariffs and the weather can decrease farmland value if they become prominent issues.
Nonetheless, this year’s high yields and favorable interest rates reported by Iowa farmers are responsible for the rise in farmland values.
When breaking down the state by counties, 82 of Iowa’s 99 counties saw an increase in their land value.
For seven years in a row, Scott county has reported the highest land value, which is now said to be $10,387 per acre, an increase of 2.8 percent from last year. Similarly, Decatur county, which reported the lowest value of $3,568 per acre, also saw an increase of 2.8 percent.
Iowa can also be broken up into low, medium and high-value land. Despite the categories, all three levels saw an increase in their value. Low-value land increased by 3.3 percent, medium-value land increased by 2.0 percent and high-value land increased by 2.4 percent.
While Zhang warns farmers not to view these positive trends as a “solid rebound” of the land market, the increase in farmland value possibly reflects more hopeful farm income in the future.