ISU economist says key factors contribute to escalating agland prices
AMES — Iowa State University ag economist Chad Hart says the recent sale of 73 acres of northwest Iowa farmland, for $30,000 an acre, indicates Iowa farmers are seeing fairly good profit margins.
“At the same time, too, though — I would say that we’re also hearing of less land being put on the market because folks are worried that those prices may be weakening,” Hart says.
Higher interest rates are a factor, plus Hart says agland that’s not rated as excellent ground for raising corn isn’t selling for especially high prices, “so there’s a separation that I think’s occurring right now where high quality land is still attracting those dollars,” Hart says, “where maybe the middle and low quality land may be starting to see some erosion in those values as we look forward.”
On November 11, a tract of farmland near Sheldon appears to have set an Iowa sales record of $30,000 an acre. It was purchased by a local farmer according to the auctioneer who handled the sale.
The value of farmland that’s enrolled in the Conservation Reserve Program appears to be holding steady, according to Hart. “There’s a market for it and I think when we look the payments that are being offered for those conservation programs, that’s helping hold that value where it’s at,” Hart says, “but we’re not seeing a run on that market like we are seeing on high-quality farmland.”
There’s a calculation called the “corn suitability rating” for agland and Hart says there’s a limited number of tracts of that highly rated ground for raising corn coming up for sale.
“The reason we see sort of northwest Iowa really, if you will, light up when it comes to land values is that you’ve got not only crop producers who are competing for that land, but also the livestock industry,” Hart says. “With strong dairy up there, the cattle industry and even a few hog producers up there, it creates a very strong competition for that land up in northwest Iowa that helps push those land values higher than what we see in the rest of the state.”
Hart is currently the crop market specialist in Iowa State University’s Department of Economics. Hart began his career at Iowa State in 1996 in ISU’s Food and Agricultural Policy Research Institute.