March 29, 2024

Iowa farm values continue to rise

Lack of available land driving sales

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Farmland values across the state are trending upwards, but industry leaders say they are still a long ways off the record prices of five years ago. A recent study released by Farm Credit Services of America in Omaha reviewed sale information and appraisals from 21 Iowa farms, shows a slight increase of 1.8 percent.

An Iowa State University study, conducted in December of last year mirrors those results, showing a modest 2 percent increase in crop values, giving the state an average value of $7,326 an acre. Realtor Betty Hansen says the problem isn’t rising values, which is still lower than the record prices farm ground commanded a few years ago, it’s demand. Hansen, a realtor in Chariton has been in the real estate business for more than 25 years. Working out of her office on the square in Chariton, Hansen and her staff of five have weathered the ups and downs for the real estate market for more than two decades. In years past, her goal was to maintain 24 active listings, now she has only one active listing.

“There’s not that many good pieces that come available,” Hansen said. “When they do come available there’s enough buyers they’re willing to pay a little more.”

Hansen, who grew up in Grundy County said the biggest problem realtors face in southern Iowa is the lack of tillable ground. Hansen said near Chariton, often times the tillable ground only represents 60 percent of the land, with the remainder unusable. When good pieces of land come up for sale, they move fast, Hansen said.

“Well we need land for land for sale, our shortage is availability, there’s not that much on the market, there’s more buyers than sellers,” Hansen said. “That’s what’s created an increase in value.”

The slowdown in sales Hansen has seen mirrors a statewide trend, with Farm Credit Services of America in Omaha reporting farm sales have dipped by 20 percent in the last year. Hansen attributes some of the slow down to the increasingly high percentage of CRP land statewide. CRP, Conservation Reserve Program, is a program that pays Iowa’s farmers to let their fields lie dormant. The contracts, which run for 10 years, are based on average crop sale prices. Converting tracts over to CRP means it’s easier for older farmers to stay on the land, even when they can’t physically do the work, Hansen said. It’s also a barrier that makes it harder for younger farmers to get started, Hansen said.

“Without doing anything your income is better than it was when you worked the farm,” Hansen said. “You could just put everything in CRP and the government just sent you these nice checks all the time. That’s made a different ball game out there.”

In Jasper County Will Cannon said he’s seen similar effects at work. Cannon, who farms around the Newton area, said pricing is down from its previous high a few years ago, but he thinks the market still needs another year or two to reset.

“I think it’s in the right ballpark, prices are definitely down significantly from where they were a couple of years ago,” Cannon said. “The best land is still holding its value pretty well, but the marginal acres that don’t have a good production history, those places might see their prices go down.”

Even with a slight drop in land prices falling, commodity prices still mean it can be tough going for anyone who wants to get started in farming, Cannon said. The biggest fear for farmers in Jasper County is that prices may keep dropping before they start to rise again, forcing farmers to continually tighten their budgets.

“If I looked at it like a stock I’d say it’s going to bottom out in the next couple of years,” Cannon said. “It would be tough, but nobody gets into farming thinking they’re going to get super rich.”

Contact David Dolmage at 641-792-3121 ext. 6532 or ddolmage@newtondailynews.com