AUDIO: ISU Assistant Professor of Economics, Wendong Zhang
For the first time in three years, the average value of farmland in Iowa increases but commodity prices and farm income remain flat.
The average statewide value of an acre of farmland is now estimated at $7,326.
“Commodity prices and farm income are still stagnant,” Dr. Wendong Zhang, professor of economics at Iowa State University said. “I would not consider this a turn of the land market.”
This is a two percent increase, or $143 per acre, from the 2016 estimate. Given the rising interest rates and stagnant farm income, Zhang says he would not be surprised to see a continued decline in values in the future.
“This, to me, is a temporary break in a downward adjustment trajectory. A limited land supply is the main factor driving this year’s increase in farmland values,” Zhang says.
Land values were determined by the 2017 Iowa State University Land Value Survey, which was conducted in November by the Center for Agricultural and Rural Development (CARD) at Iowa State University and Iowa State University Extension and Outreach.
Results from the survey are consistent with results by the Federal Reserve Bank of Chicago, the Realtors Land Institute, and the US Department of Agriculture. Dr. Wendong Zhang, Assistant Professor of Economics at Iowa State University, led the annual survey.
Starting in 2004, several factors, including the ethanol boom and historically low interest rates, drove five consecutive years of double-digit growth in average farmland values, culminating in an historic peak of $8,716 per acre by 2013. Average farmland values then began an immediate decline, dropping 8.9 percent, 3.9 percent, and 5.9 percent, in the following three years.
Those declines were the first time since the 1980s farm crisis that farmland values had declined three consecutive years.
Read the full report here.