Drop in Iowa Farmland Values May Look Like the 1980s, But it's Not

December 16, 2016 10:30 AM

Farmland values declining third straight year, first time since 1980s

The index also showing farmland prices declining for 37 months straight. Some of these trends haven’t been seen since the last farm crisis.

A new Iowa farmland values study is showing the state’s farmland values are tumbling for the third year in a row throughout all 99 counties. This is the first time it’s happening since the 1980s farm crisis.

Jacob Lammert is one Iowa producer who knows what it’s like to farm near a city.

“We’re close enough to a large city where our property values are higher because you’re fighting investors and stuff,” said Treynor, Iowa farmer, Jacob Lammert.

But a new report from Iowa State University says those land values aren’t the case everywhere in the state. Iowa’s average land values declined roughly 5.9 percent over the past year.

“Farmland is very significant. Farmland consistently accounts for eighty to eighty five percent of all U.S. farm assets,” said Iowa State University Assistant Economics Professor, Wendong Zhang.

Zhang says this is the third straight year of declines, which hasn’t been seen since the 1980s farm crisis but Zhang believes the chance of a repeat of the 1980s is low.

“There is substantial income accumulation before we entered this downturn. We also have way less leverage and debt because of stricter lending limits. We also {now have} greater coverage of crop insurance programs covering 90 percent rather than 50 percent of corn and bean acres,” said Zhang.

Zhang says rising interest rates will create more downward pressure for land markets next year.

"Compared to the 1980s where we had fifteen or twenty percent high interest rate, what we're {seeing} now is two to three percent. What we will likely see is slow, steady, increases to control inflation,” said Zhang.

Despite the market challenges, producers like Lammert keep doing their job and hope for greater returns.

Even though all counties have dropped, Zhang says one year ago, the Northwest region of Iowa reported a one percent increase due to strong, robust livestock returns. This year, like grains, livestock receipts are down and that’s impacting land markets as well. 

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