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September 2010 Archive for Your Precious Land

RSS By: Mike Walsten, Pro Farmer

Mike Walsten has covered major business trends in agriculture for more than 40 years.

Iowa Farmland Posts 6% Six-Month Gain

Sep 22, 2010

Mike Walsten

The value of Iowa farmland rose 5.7% during the six-month period ending September 1, according to the twice-a-year survey conducted by the Iowa chapter of the REALTORS Land Institute (RLI). Chapter members who took part in the survey were asked to estimate the value of bare, unimproved cropland. Pasture and timberland were also surveyed and the survey found these values rose 6.5% and 3% respectively. The pasture and timberland figures were not included in the overall figure for farmland.

Combining the survey's 5.7% increase with the 2.8% decrease in values reported in the RLI's March survey indicates a statewide average increase of 8.5% for the year ending September 1, 2010, says Troy Louwagie, ALC, Hertz Farm Management, Mt. Vernon, Iowa, who heads up the survey team for the RLI.

All nine of Iowa's crop reporting districts showed an increase. The districts varied from a 9.8% increase in northwest Iowa to a 2.4% increase in south central Iowa for the March 2010 to September 2010 period.

Factors contributing to the increase in farmland values include: limited amount of land offered for sale, higher commodity prices, lack of alternative investments, strong cash rents, and favorable long term interest rates. Concerns that could affect farmland value in the future include: an increase in interest rates and attractive alternative investments.

Click here for the survey data.

The Iowa RLI has conducted the farmland survey since 1978.

I will have more details in the next issues of my newsletter. If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.


World Bank Sees Positives In Big-Block Land Sales, But Wants Controls

Sep 09, 2010

Mike Walsten

The anticipated study from the World Bank (see World Bank to Issue Warning on 'Farmland Grab') into the sale of large blocks of land by some less-developed countries to private investors has been released and the report is less negative than some expected. The report supports the sale of land by poor nations in order to boost agricultural production but it advocates for a set of guidelines to be followed to insure local land rights are upheld, food security is improved and local residents are protected. To read more on this issue:

Click here for the Financial Times story on the report.

Click here for the full 164-page report.

Our take: The scramble by investors, private companies and governments to secure food production underlines the rising demand for productive farmland and underscores the strength of demand underpinning U.S. farmland values.

If interested in seeing a copy of my LandOwner newsletter, just drop me an email at landowner@profarmer.com or call 800-772-0023.

Illinois Farmland Prices Increase Slightly

Sep 01, 2010

Mike Walsten

The value of Illinois farmland rose only slightly in the first half of 2010, according to a mid-year "snap-shot" survey conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA). The ISPFMRA conducts a survey half way through the year to obtain general directions on farmland prices and cash rents. The information supplements the Society's in-depth survey which is conducted annually at year end.

Key Survey Points

1. Respondents indicated higher quality land increased slightly during the first half of 2010. Excellent quality farmland rose $131 an acre, or 1.7%. Fair quality farmland was listed as stable. (Excellent quality farmland averages more than 190 bu. of corn per acre, good quality farmland averages between 170 and 190 bu. per acre, average quality farmland averages between 150 and 170 bu. per acre and fair quality farmland averages below 150 bu. per acre.).

2. On July 1, 2010, farmland prices averaged $7,665 per acre for excellent quality farmland, $6,639 for good quality land, $5,724 for average quality farmland and $4,646 for fair quality farmland.

3. The volume of sales was less during the first half of 2010 compared to a year earlier. Sixty-five percent of respondents indicated the volume of sales was less than during the first half of 2009.

4. Most respondents expect the volume of sales to be the same or less during the last half of 2010 as compared to the last half of 2009.

5. Most respondents expect farmland prices to increase during the next 12 months: 16% expect values to increase more than 5% and 64% expect increases between 0 and 5%. Fourteen percent expect stable prices while 17% expect prices to decline.

Cash Rents

Respondents expect 2011 rents to average slightly higher than 2010 levels.

On excellent quality farmland, respondents indicated they expect 2011 rents to rise about $7 an acre, a 2.5% increase, to an average of $279 an acre. That compares to an average of $272 an acre for 2010.

On average quality farmland, respondents indicated the average cash rent in 2010 was $230 an acre and expect 2011 rents to average $237 an acre, also a $7 increase.

On average quality farmland, respondents said the average cash rent in 2010 was $193 an acre and expect 2011 rents to average $199 an acre, a $6 increase.

The survey also looked into leasing arrangements with 65% of respondents expecting increase use of a variable cash rent for 2011. You can find survey results concerning variable cash rent arrangements and bonus cash rent arrangements by clicking here.

If interested in seeing a copy of my LandOwner newsletter, just drop me an email at landowner@profarmer.com or call 800-772-0023.

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