Farmland in Iowa

In the wake of the reported $21,000 per acre sale of farmland in Iowa, several news outlets have taken a closer look at the ripples in the Iowa farm market. One of the most thought-provoking pieces I've come across was recently published on Bloomberg, written by Tim Jones and Elizabeth Campbell.

The title is "Iowa Farms Minting Millionaires as Rich-Poor Gap Widens", and it covers everything from farmland prices to rental rates to the Beverly Hillbillies. It's a thoughtful, interesting article that sheds light on several different aspects of the changing market and the income inequality it is producing.

A couple things that stuck out to me - the amount of people available for the bidding in a farmland auction that ended at $14,300 an acre. The article then includes this provocative statement "Farmland auctions in Iowa now resemble a dressed-down spectator sport with Sotheby’s prices, a reflection of the yawning divide that has opened in some of the most bountiful stretches of rural America. Farm earnings in the state and throughout the U.S. increased at eight times the rate of nonfarm wages from 2008 to 2011, fueling resentment and straining the social fabric of places with deep egalitarian roots."

The article also includes this quote from David Peters, a sociologist from Iowa State University, “Iowa had had historically low levels of inequality, but now it is skyrocketing. Today you have far fewer farmers and a small number earning larger and larger incomes. It doesn’t spread through the economy like it used to.” The authors share a lot of statistics on the strength of the recovery seen in agriculture, especially as it compares to the stall seen for many other rural residents.

Another thing that caught my attention - it seems that "those buying up the land are more likely to be locals than just a few years ago. The percent of Iowa farmland purchased by investors peaked in 2005 at 39 percent before falling to 22 percent in 2011, according to Michael Duffy, an agricultural economist at Iowa State University. Farmer purchases rose in that period to 77 percent from 59 percent," according to the article.

Their research showed that an acre of land in O'Brien County, which is just one county off the border with Minnesota, is now valued at $9,513 in 2011, a 33% increase since 2010! These price increases will likely start spreading into Minnesota in the near future, especially with the success of the last couple farming years.

However, the article also reminds us about the farm prices in the 1980s, and makes the point that this likely can not last forever.

Based on these trends, now would be a great time for a farmland appraisal. I would be happy to work with you on an appraisal, or to help you sell your farmland for a market price. Please call me at 320-894-7528 or e-mail me at noah@farmlandman.com and I will help you out.

Have a great week!
Noah Hultgren
noah@farmlandman.com