Despite a softening farmland market, northwest Iowa is once again the site of a $20,000-plus auction this week. The sale came Monday as 80 very prime unimproved acres of high-quality farmland passed under the gavel for $20,400 and acre. The property involved is located a few miles east of Boyden, a hotspot for eye-blinking farmland auction prices.
Soil quality is about as good as it gets. It carried a CSR of 78.9, 18% higher than the county average of 64.8. Here's the amazing part -- it carried a CSR2 rating of 99.5. Now that's prime.
What drives demand in that area? It features a community of well-established, multi-generation, deep financed livestock and grain operations. There is a strong desire by younger generations to return to the farm. In order to handle that expansion, livestock operations need more ground to produce feed and for manure disposal. Without the ground, expansion is over.
In addition, there is strong ethanol demand in the region, which turns the area into a grain deficit region at times. Basis levels, once the worse in the state, can be quite narrow at times.
For perspective, Monday's sale compares to the headline-making $21,900-per-acre auction marked Oct. 25 in 2012. That farm was also 80 acres in size with 79 tillable acres. It carried a CSR of 73.7 and a CSR2 of 84.1. It was located a little southwest of Boyden. Other farms in that area sold for $20,000 and more in 2011 and 2012.
So, does Monday's $20,000-plus sale mark a relaunch of the farmland price boom? Probably not. Rather, Monday's price is down 6.8% from the 2012 high. That seems to square with some of the weakness in seen in top-end prices around the state.
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