Farmland Auction: Cerro Gordo County, Iowa, Land Brings $7,760 per Acre
Jeff Obrecht has noticed that farmers are becoming choosier about which farms they’re willing to shell out a lot of money for.
The Iowa Falls, Iowa, auctioneer steered the auction of two side-by-side tracts of Cerro Gordo County land on October 11. They were good, productive pieces of land, located about 8 northwest of Rockwell. The sale settled an estate.
Tract 1, 156 acres, has 155 acres of cropland with mostly Webster clay loam and Clarion loam soils, and a Corn Suitability Rating 2 of 83.6 (based on a scale of 0 to 100). This tract has 3.49 acres of Conservation Reserve Program contract, paying $333.12 per acre through 2025. It sold for $1.372 million, or $8,800 per acre.
Tract 2, 153 acres, has 144 crop acres and within those, 3.34 acres of CRP paying $333.12 through 2025. The tract has a 83.2 CSR2 score, with mostly Webster and Clarion soils. It sold for $1.025 million, or $6,700 per acre.
The total selling price was about $2.40 million, or roughly $7,760 per acre.
Same soil quality, but much different price. Here’s the difference:
Tract 2 has a railroad right-of-way crossing the west side of the property, essentially cutting the field in half. Whoever farms that piece of ground has to turn around twice as much, wasting seed and chemical and spending more time to do the work.
“We’re seeing more and more value placed on farmability with today’s big planters and a lot of point rows,” Obrecht explains. “But really, there wasn’t much difference in the quality of the land between the two.”
The rail line in Tract 2 is abandoned, although it is now a bike trail. In many cases, abandoned rail lines revert to the adjoining landowner, but not in this case.
Also, Obrecht points out that the buyer of Tract 2 spent $6,700 on 9 acres that will never be farmed due to the rail line. “That’s $60,300 for land they will never generate a dime off of,” he says.
Obrecht says the land market is strong right now. Investors are coming back into the land market after a four- or five-year hiatus (Tract 2 of the Cerro Gordo sale was purchased by and investor), which drives up the selling price. Yet, there are adjoining landowners and neighboring farmers who still have cash and have no interest in investing in the stock market or mutual funds, he explains.
“Some of these guys know land, and tell themselves that’s what they’re going to buy; 80% of the farms I sell go to neighboring farmers,” Obrecht says.