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Rumors of the huge price tag from a recent auction in Sioux County, Iowa, appear to be true. An 80-acre tract recently sold for $13,950/acre at an auction confirms Del Beyer, Beyer Auction & Realty, Sioux Center, whose firm handled the auction.
While this may raise some eyebrows and lead some to believe new levels of farmland prices are about to be established, it’s best to look at the area and understand it’s history. "The area is dominated by very well-established farm families with deep roots," he tells us.
The ground featured a CSR (corn suitability rating) of 70 — typical for that particular area. Selling price —$13,950 an acre.
"There are commercial-size cattle, hog, poultry and dairy operations here, as well. Plus, there’s the pull from ethanol plants," Beyer says. The presence of so many extensive, diverse operations can result in intense bidding when a tract becomes available.
Beyer says bidding started at $7,500 an acre and rose in $100 increments with recesses at $11,000 and $12,000 an acre. Two bidders — neighboring farmers — carried the contest upward in $50 increments from the $12,000 mark. Total time of the auction: 25 minutes.
For perspective, Beyer was involved with two other recent land auctions in Sioux County — both 80-acre tracts. One sold for $8,550 an acre and the other $9,575 an acre.
Answering the question of a more representative price for farmland can be a tricky one, because there are many exceptions.
The land market is local — the Sioux County market is unusually strong, for instance, but there are others that are very conservative. So coming up with a representative price range is difficult. However, Farmers National Company (FNC) has attempted to do just that. The charts below show their estimated average value for high quality farmland (blue) and below average farmland (green) as of the end of September.
"You’ll see individual land sales that are above the averages we list here," says FNC CEO Jim Farrell, AFM, "but in general you’ll see the bulk of sales coming in somewhere near the figures we’ve listed here."