Low interest rates fueling a fourth year of land value hikes
The value of Iowa farmland has climbed to record levels, according to an annual study released Wednesday by Iowa State University.
The average value of an acre of farmland reached $2,275 in 2003, the highest reported since ISU began conducting the agland survey in 1941.
Rich Buena Vista County famland demands even better - an average of $2,782 per acre, up 7.8 percent from 2002.
The previous state record was $2,147 in 1981, on the cusp of the farm crisis era. The average increase this year was $192 an acre statewide, or 9.2%.
Mike Duffy, ISU Extension farm economist who conducts the survey, said after accounting for inflation, the 2003 figure is equivalent to the value of land in the early 1970s, when the increase in values began that led to the 1981 peak.
Values increased in all 99 counties. They topped $3,000 an acre in four counties - Scott, Cedar, Guthrie and Sioux, and some area land sales have touched that mark.
In the region:
* Sac County price was $2,678, up 7.4% from a year ago.
* Clay County, $2,644, up 7.1%
* Cherokee County, $2,406, up 13.8%
* Ida County, $2,568, up 8.03%
* O'Brien County, $2,993, up 12.1%
* Palo Alto County, $2,532, up 9.6%
* Pocahontas County, $2,762, up 8.5%
The survey, of real estate brokers, farm lenders and others who work with the land markets, showed the increases ranged from just over 6 percent in the North Central Crop Reporting District to nearly 12 percent in the South Central Crop Reporting District.
Individual county increases ranged from 2.7 percent in Mitchell County to 15.2 percent in Appanoose County. The highest value was $3,697 per acre in Scott County, while the lowest was $936 per acre in Decatur County.
Webster County (the Forts Dodge area) had an increase of $354 per acre for the largest dollar increase.
The average value increased for the fourth year in a row after slight declines in 1998 and 1999.
Low interest rates were a major factor in the increases, Duffy said. Other factors were the demand created by investors, the scarcity of land on the market, and the impact of government payments.
Improving commodity prices and better-than-expected corn yields each were mentioned as positive factors by 11 percent of those participating in the survey.
Negative factors included weather and uncertainty in general. The county estimates are derived through a procedure that combines ISU survey results with data from the U.S. Census of Agriculture.