| High grain prices driving value of farmland higher |
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By DOUG SCHMITZ
Iowa Correspondent
MOUNT VERNON, Iowa — According to a new survey by the Iowa Farm & Land Chapter No. 2 Realtors Land Institute, Iowa farmland values peaked 7.1 percent since March, the highest increase since the Mount Vernon, Iowa-based group started surveying the state’s 99 counties 30 years ago.
“High crop prices were the major factor contributing to the increasing farmland values,” said Troy Louwagie, a farm real estate manager with Hertz Real Estate Services, who chairs the land institute’s survey committee.
“Other factors include demand for corn and beans created by expansion of ethanol bio-diesel plants, limited amount of land offered for sale, good crop yields and positive attitudes about agriculture,” he said.
Established in September 1978, the institute surveys state farm brokers and farmland specialists every March and September, asking for their opinions about the current status of the Iowa farmland market. An arm of the National Assoc. of Realtors, the institute is organized for realtors who specialize in farm and land sales, management and appraisal.
Participants were asked to estimate the average value of farmland as of Sept. 1, 2007. The estimates were based on bare, unimproved land with a sale price on a cash basis; pasture and timberland values were also requested as supplemental information.
The Iowa Farm and Land Chapter No. 2’s September 2007 Land Trends and Values Survey, released on Sept. 18 in Clive, Iowa, indicated that Iowa farmland values are still steadily peaking in all of the state’s nine crop reporting regions over the last six months.
According to the survey, the percent increases in values for each of Iowa’s nine crop reporting districts since March are: 7 percent in central Iowa; 5.1 percent in east central Iowa; 5.8 percent in north central Iowa; 7.2 percent in northeast Iowa; 9.8 percent in northwest Iowa; 7.6 percent in south central Iowa; 8.8 percent in southeast Iowa; 4.1 percent in southwest Iowa; and 8.3 percent in west central Iowa.
“(The) northwest crop reporting district experienced the highest percentage growth for the last six months at 9.8 percent,” Louwagie said last week. “This is due to the good yields, abundance of livestock, and strong farmer and buyers in that area.”
According to the survey, since Sept, 1, 2006, the price of an acre of Iowa farmland hit 20.7 percent, surpassing the previous record increase of 20.2 percent in 1988.
The survey said the average price of Iowa farmland that produces more than 160 bushels an acre was $4,655 an acre, compared with $4,313 in March. In east central Iowa, the value of an acre of farmland reached 5.1 percent from $4,607 in March, to $4,883 in September. Louwagie said the highest priced farmland was in central Iowa, averaging $5,064 an acre.
Louwagie said farmland values in the neighboring states of Illinois, Indiana and Ohio have increased at a similar percentage rate with Iowa farmland prices, with the average farm real estate price higher in Illinois topping $4,000 per acre, the highest on record.
An Aug. 24 report, titled “Illinois Farm Real Estate Values Continue Double-Digit Increases,” said Illinois farmland values continued to increase 92 percent since 2000.
“This includes the value of all land and buildings,” said Dale Lattz, a University of Illinois Extension farm management specialist. “The figure was 13.9 percent higher than the 2006 average of $3,800 per acre.
“The current strength in farmland values seems to be driven by higher corn and soybean prices and the expectation that these prices will remain high due to strong demand,” he said.
An annual Purdue University survey indicated that Indiana farmland values and cash rents were at their highest increase since records were kept back in 1977. The survey said farmland values have increased 19 percent, up from 17 percent a year ago.
The Land Values and Cash Rent Survey, released Aug. 15, had shown that Indiana farmland values increased from 17 percent to 19 percent across the state, and from 9 percent to 10 percent in cash rents from the June 2006 level, said Craig Dobbins, Purdue Extension farmland economics specialist and survey coordinator.
In Ohio, the most recent survey results indicated that top performing cropland was valued at $4167.71 in 2007, which was a projected increase of 4.15 percent. The survey, titled “Ohio Cropland and Cash Rents 2006-2007,” also found that cash rents were expected to increase 6.27 percent in 2007.
Louwagie said other factors in Iowa that contributed to the statewide increase included favorable long-term interest rates and 1031 Tax Deferred Exchanges. He added that concerns that could affect Iowa farmland values in the future were the uncertainty of future government programs and increased fuel and fertilizer costs. |
| 10/3/2007 |
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