The Farm CPA
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
The Iowa Farmland Premium
Apr 25, 2012
On Tuesday, I had a quick meeting at our Des Moines office. After that, I met Moe Russell at the local Village Inn for a quick cup of coffee (or in my case, a Coke since my mother bred the coffee gene out of me). Moe and I caught up with business and then had a quick discussion on the perceived premium of comparable farmland in Iowa over most other states.
For example, near my farm in northwestern Missouri which might yield on average 165 bu. corn and 55 bu. beans, a 320-acre farm just went under contract for $4,550 per acre. This yield is very consistent from year to year. The same yielding farm in most counties in Iowa would probably cost closer to $8,000-$9,000 per acre or a premium of perhaps 2 to 1 or more.
From a purely business standpoint, it may make sense for certain Iowa farmers to sell their farmland and reinvest it in comparable farmland in other states that cost much less. This, perhaps, makes the most business sense, but most farmers have an emotional attachment to their farm, which in many cases outweighs the purely financial consideration.
In the afternoon, I had a quick meeting at our Cedar Rapids office and then headed up to Rowley, Iowa, to ride on the tractor for about three hours planting corn. For an old farm boy, there is not much that is more therapeutic than to ride a tractor or combine. These new 24-, 36- and even 48-row planters with airfeeds, insecticide attachments, etc., are much more advanced than what I grew up with. We actually used a set of grain drills, and one of my best memories of the farm is taking a gallon coffee can from drill to drill and putting wheat into the low spots. There was no control from the tractor cab to control the feeding of the wheat into the drill. It was all mechanical.
Today, I spend more time in this area and then head over to northern Illinois for a meeting.