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Iowa farmland jumps 25%

DANIEL LOOKER Updated: 03/23/2011 @ 7:27am Business Editor

Farmland values are racing ahead at a breathless pace, according to the latest survey released Tuesday by the Iowa Farm and Land Chapter of the Realtors Land Institute.

Average cropland values in Iowa have risen 19.7% in the September to March period and are up 25.4% for the year.  High quality land is now worth $7,389 an acre statewide, with values passing $8,000 an acre in west central and northwest Iowa.

“This was the highest six-month and the highest one-year increase our survey has had since it started in 1978,” said Troy Louwagie of Hertz Farm Management, who coordinates the survey for the realtors.

Louwagie told Agriculture.com that the second biggest increase was 20.7% for the year running up to September, 2007.  Iowa State University surveys of land values in the early 1970s—1973 through 1975 – showed farmland going up more than 30% a year. If you factor in the higher inflation rate of the 1970s with today’s low inflation, last year’s price increase might be even bigger in real, inflation-adjusted dollars, he said.

And the pace of land price increases is even greater for the highest quality land, he said.

“There are farms that were worth $6,000 [an acre] a year ago that today are worth $8,500,” Louwagie said. 

“Farmers are still the primary buyers,” he said. “If you look at Iowa State information they are saying that about 70% were bought by farmers last year.” Investors accounted for another 25%.

As for the future, there are no guarantees that land prices will see a three-year rapid increase comparable to the 1970s.

“Interest rates and commodity prices. They’re the two things we have to keep an eye on,” Louwagie said. “If interest rates were to jump a couple of points and corn was to drop a dollar, I think you’d take the top off this market real quick.” 

Many of the recent sales have been on a cash basis, whether it’s land going to farmers or investors, he said.

“There’s some debt out there but in most cases it’s minimal,” Louwagie said. 

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