Extension Communications Extension 4-H Youth Building Ames, Iowa 50011-3630 (515) 294-9915

12/17/03

Contacts:
Michael Duffy, Economics, (515) 294-3000, mduffy@iastate.edu
Del Marks, Continuing Education and Communication Services, (515) 294-9807, delmarks@iastate.edu

Iowa Farmland Value Reaches Record High at $2,275 an Acre

AMES, Iowa -- The average value of an acre of farmland in Iowa reached $2,275 in 2003, the highest figure reported since Iowa State University began conducting an annual survey of land values in 1941.

The 2003 average value topped a previous record of $2,147 reported in 1981. Mike Duffy, ISU Extension farm economist who conducts the survey, said after accounting for the effect of inflation on the value of the dollar, the 2003 figure is equivalent to the value of land in the early 1970s, when the increase in values began that led to the 1981 peak. In dollars adjusted to current values, the peak would have occurred in 1979 at $2,697 an acre.

Values increased in all 99 Iowa counties and topped $3,000 an acre in four counties: Scott, Cedar, Grundy and Sioux. The survey of real estate brokers, farm lenders, and others who work directly with the land markets, indicated the increases ranged from just over 6 percent in the North Central Crop Reporting District to nearly 12 percent in the South Central Crop Reporting District. Individual county increases ranged from 2.7 percent in Mitchell County in North Central Iowa to 15.2 percent in Appanoose County in South Central Iowa.

The average value increased for the fourth year in a row after slight declines in 1998 and 1999. The average increase was $192 an acre statewide, or 9.2 percent.

Duffy said low interest rates were a major factor in value increases this year and were mentioned by 48 percent of those responding to the survey. Other positive factors were the demand created by investors, mentioned by 17 percent of the respondents, the scarcity of land on the market, mentioned by 15 percent, and the impact of government payments, mentioned by 12 percent. Improving commodity prices and better than expected corn yields each were mentioned as positive factors by 11 percent of those participating in the survey.

Negative factors that helped keep prices down this year included weather and uncertainty in general, listed by 13 percent of the respondents, and low soybean yields, mentioned by 12 percent.

Low grade land, which averaged $1,463 per acre in 2003, a 10.7 percent increase over the previous year. Medium grade land averaged $2,123 per acre, a 10.3 percent increase, and high grade land averaged $2,790 per acre, an increase of 8.3 percent.

The highest value in an individual county was $3,697 per acre in Scott County in east central Iowa, while the lowest value in an individual county was $936 per acre in Decatur County in south central Iowa. Decatur County was the only county in the state with an average value below $1,000 an acre. Webster County had an increase of $354 per acre for the largest dollar increase.

Fifty-two percent of the survey respondents said the number of sales this year was about the same as last year, while 26 percent said there were more sales in 2003, and 22 percent said there were fewer sales.

About 1,100 copies of the survey are mailed each year with respondents asked to report values as of Nov. 1. Average response is 500 to 600 completed surveys, with 541 returned this year. Respondents also were asked this year for the first time to report on land values in nearby counties if they had knowledge of values in those counties.

Only the state average and the averages for the nine crop reporting districts are based directly on data collected in the survey. The county estimates are derived through a procedure that combines ISU survey results with data from the U.S. Census of Agriculture. The ISU survey is the only one of several conducted throughout the year that reports data for all 99 counties.

The survey is sponsored by the Iowa Agriculture and Home Economics Experiment Station at ISU, with results reported by ISU Extension. Duffy was assisted in the project this year by Darnell Smith, extension program specialist in economics.

Additional information on the 2003 survey is available on the ISU Extension Web site at https://www.extension.iastate.edu/emms/2003land/.

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