The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Mike Walsten has covered major business trends in agriculture for more than 40 years.
The average annual cash return to an acre of Iowa farmland was 7% for the period of 1970 to 2009, according to research conducted by Iowa State University. Extension Economist William Edwards and Extension Value-Added Specialist Don Hofstrand looked at average cash rental rates and land values published annually by USDA, not Iowa State University data, in conducting their review. The lowest annual cash return was 3.8% posted in 2008 and the highest was 9.6% recorded in 1987. Edwards and Hofstand said the low 2008 return was due to land values rising faster than rental rates while the high 1987 rate was because land values declined faster than rental rates during the crisis of the 1980s.
Their research also looks at average cash returns and land appreciation during various periods, such as the "Boom Period" of 1970-1981 and the "Recovery Period" of 1988-2003 to name two. They also look at returns based on various farmland purchase dates.
It is interesing perspective. You may access the full report by clicking here.
If interested in seeing a copy of my LandOwner newsletter, just drop me an email at email@example.com or call 800-772-0023.