The value of farmland in Iowa has dropped slightly this year, according to the Iowa State University Land Values Survey.
Wendong Zhang, an economics professor at ISU, collects information from realtors, lenders, appraisers and other people who monitor farm sales and transitions. He says the 0.8 percent decrease in farmland value compared to last year is partly still a correction from the record-high values of 2013. This is the fourth time in the past five years that land values have decreased.
“Given what we are seeing in the commodity markets and interest rates,” Zhang says, “the market is holding up fairly…remarkably well.”
Large harvests and trade disputes have pushed the price of corn and, especially, soybeans lower, and the Federal Reserve is likely to continue increasing interest rates.
Zhang says farmers may want to reduce expenses overall on their farms, to the extent they can, but he says this year’s correction isn’t a cause for major concern.
“Over the last six to seven years, we have seen bumper crop after bumper crop. Essentially, the amazing crop productivity helped lower the per-bushel cost,” Zhang says, “but also pushed down the commodity prices. That tends to put downward pressure on land markets.”
But he says the demand for land remains stable, which helps temper the downward trend. Zhang says the change in farmland prices in Iowa is consistent with other Corn Belt states including Illinois, Indiana, Minnesota and Nebraska.