ISU Extension News

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

12/14/04

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 $2,629 an Acre

AMES, Iowa -- The average value of an acre of farmland in Iowa increased $354 to an all-time high of $2,629 in 2004, according to an annual survey conducted by Iowa State University. Using this average increase of $354. the total value of the state's 32.6 million acres of farmland was up by about $11.5 billion over the past year.

The 2004 average value topped a previous record of $2,275 reported last year, and it represented a 15.6 percent increase over the 2003 average. Mike Duffy, ISU Extension farm economist who conducts the survey, said the effect of inflation on the value of the dollar means that the 2004 figure is roughly the same as the value of land in 1973, before the run-up in values began that led to a peak of $2,147 in 1981.

After the 1981 peak, Iowa land values dropped sharply, reaching a statewide average of $787 per acre in 1986. The 2004 figure represents an increase of 234 percent in the past 18 years.

Values increased in all 99 Iowa counties and topped $1,000 an acre in every county for the first time since ISU began conducting the survey in 1941. Twenty-seven counties had an average value of more than $3,000 per acre this year, compared with only four in that category in 2003. The average value in Scott County this year was $4,167 an acre, the first time a county has topped the $4,000 level.

The survey of real estate brokers, farm lenders, and others who work directly with the land markets, indicated the increases topped 10 percent in all nine of the state's crop reporting districts, ranging from 12.5 percent in the east central district to 17.7 percent in the southwest crop reporting district. Gains of less than 10 percent were reported in only eight counties. Fifteen counties had increases of more than 20 percent. The smallest percentage increase was 7.7 percent in Jones County, and the largest increase was 22.9 percent in Hardin County.

The average value increased for the fifth year in a row after slight declines in 1998 and 1999. The largest dollar increase was $592 per acre in Humboldt County. Other counties with an increase of more than $500 per acre (or $50,000 per 100 acres) included Plymouth, Dickinson, Calhoun, Hancock, Wright, Hamilton, Webster and Hardin.

Iowa farmland has increased in average value by about 47 percent over the past five years. Duffy said he is frequently asked whether the run-up in prices is likely to result in another crash in land values similar to the one that occurred in the mid 1980s. "That is a very difficult question to answer. The answer really is 'it depends,'" Duffy said. Some of the factors that will influence future land values include the level of government farm programs, which have helped support land prices in recent years, and federal budget, trade and monetary policy.

The cost of farm programs could make them a political target, which would have an adverse effect on land values, Duffy said, and challenges to the legality of U.S. farm subsidies by our international trading partners also could be a factor. Federal monetary policies might be a factor if interest rates begin to rise, he said.

Duffy said low interest rates were a major factor in value increases this year and were mentioned by 45 percent of those responding to the survey. Other positive factors were good crop yields in 2003, mentioned by 22 percent of the respondents; strong demand for land as a productive investment, mentioned by 19 percent; good grain prices in the recent past, mentioned by 18 percent; favorable tax treatment of land transactions, mentioned by 15 percent, and the scarcity of land on the market, mentioned by 12 percent.

Negative factors that worked to hold down prices from even larger increases this year included lower current grain prices, listed by 20 percent of the respondents, and the belief that land prices are too high to provide enough cash flow to pay for the purchase, mentioned by 12 percent.

Low grade land, which averaged $1,713 per acre in 2004, increased 17.1 percent over the previous year. Medium grade land averaged $2,457 per acre, a 15.7 percent increase, and high grade land averaged $3,193 per acre, an increase of 14.4 percent.

The highest value in an individual county was $4,167 per acre in Scott County in east central Iowa, while the lowest value in an individual county was $1,104 per acre in Decatur County in south central Iowa.

Forty-four percent of the survey respondents said the number of sales this year was about the same as last year, while 33 percent said there were more sales in 2004, and 22 percent said there were fewer sales. Existing farmers were the buyers in about 56 percent of the transactions this year, with investors accounting for about 38 percent of the sales, new farmers 2 percent, and other purchasers 4 percent.

About 1,100 copies of the survey are mailed each year to licensed real estate brokers, ag lenders, and others knowledgeable of Iowa land values. Respondents are asked to report values as of Nov. 1. Average response is 500 to 600 completed surveys, with 516 returned this year. Respondents provided 675 individual county estimates, including 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 2004 survey is available on the ISU Extension Web site at http://www.extension.iastate.edu/emms/lvs2004/.

-30-

Survey Results By Crop Reporting District:

2004

2003

2003-2004

District

$/acre

$/acre

$ Change

% Change

Northwest

3,118

2,683

435

16.2%

North Central

2,913

2,514

399

15.9%

Northeast

2,665

2,347

317

13.5%

West Central

2,728

2,329

399

17.1%

Central

3,101

2,652

449

16.9%

East Central

3,054

2,715

340

12.5%

Southwest

2,088

1,774

314

17.7%

South Central

1,547

1,354

193

14.2%

Southeast

2,286

1,979

306

15.5%

State Average

2,629

2,275

354

15.6%

Survey Results By Crop Reporting District:

2004

2003

2003-2004

District

$/acre

$/acre

$ Change

% Change

Adair

1,766

1,487

279

18.8%

Adams

1,697

1,392

305

21.9%

Allamakee

1,789

1,645

144

8.7%

Appanoose

1,270

1,090

180

16.6%

Audubon

2,421

1,982

439

22.2%

Benton

3,015

2,777

238

8.6%

Black Hawk

3,311

2,967

344

11.6%

Boone

3,284

2,883

401

13.9%

Bremer

3,027

2,647

380

14.3%

Buchanan

2,976

2,556

419

16.4%

Buena Vista

3,223

2,782

441

15.8%

Butler

2,900

2,536

364

14.4%

Calhoun

3,302

2,790

513

18.4%

Carroll

3,054

2,729

325

11.9%

Cass

2,279

1,880

400

21.3%

Cedar

3,280

3,027

253

8.4%

Cerro Gordo

2,995

2,704

291

10.8%

Cherokee

2,890

2,406

484

20.1%

Chickasaw

2,523

2,300

223

9.7%

Clarke

1,327

1,116

211

18.9%

Clay

2,974

2,644

330

12.5%

Clayton

2,430

2,111

318

15.1%

Clinton

2,939

2,701

238

8.8%

Crawford

2,607

2,192

415

18.9%

Dallas

2,947

2,634

313

11.9%

Davis

1,461

1,225

236

19.3%

Decatur

1,104

936

167

17.9%

Delaware

3,059

2,576

483

18.8%

Des Moines

2,840

2,562

279

10.9%

Dickinson

2,771

2,269

503

22.2%

Dubuque

2,949

2,722

227

8.4%

Emmet

3,064

2,698

366

13.6%

Fayette

2,671

2,263

408

18.0%

Floyd

2,781

2,307

474

20.6%

Franklin

2,962

2,562

399

15.6%

Fremont

2,342

2,052

291

14.2%

Greene

2,909

2,615

295

11.3%

Grundy

3,493

3,102

391

12.6%

Guthrie

2,388

1,982

406

20.5%

Hamilton

3,442

2,881

561

19.5%

Hancock

2,986

2,441

545

22.3%

Hardin

3,080

2,507

573

22.9%

Harrison

2,460

2,096

364

17.3%

Henry

2,677

2,391

286

12.0%

Howard

2,190

1,945

245

12.6%

Humboldt

3,260

2,669

592

22.2%

Ida

2,935

2,568

367

14.3%

Iowa

2,370

2,032

337

16.6%

Jackson

2,427

2,122

305

14.4%

Jasper

2,687

2,302

384

16.7%

Jefferson

1,916

1,698

218

12.8%

Johnson

3,169

2,698

471

17.4%

Jones

2,883

2,677

206

7.7%

Keokuk

2,281

2,047

234

11.4%

Kossuth

3,119

2,686

432

16.1%

Lee

2,341

1,982

359

18.1%

Linn

3,275

2,926

349

11.9%

Louisa

2,579

2,168

411

18.9%

Lucas

1,358

1,199

159

13.2%

Lyon

2,938

2,634

304

11.5%

Madison

2,136

1,808

328

18.1%

Mahaska

2,362

1,954

408

20.9%

Marion

2,136

1,793

343

19.1%

Marshall

3,187

2,846

340

12.0%

Mills

2,310

1,907

404

21.2%

Mitchell

2,724

2,409

315

13.1%

Monona

2,251

1,914

336

17.6%

Monroe

1,418

1,200

219

18.2%

Montgomery

2,103

1,798

305

17.0%

Muscatine

2,976

2,528

448

17.7%

O'Brien

3,463

2,993

470

15.7%

Osceola

2,963

2,561

402

15.7%

Page

1,994

1,772

222

12.5%

Palo Alto

2,937

2,532

405

16.0%

Plymouth

3,064

2,564

501

19.5%

Pocahontas

3,210

2,762

449

16.2%

Polk

2,893

2,483

410

16.5%

Pottawattamie

2,627

2,242

384

17.1%

Poweshiek

2,518

2,053

465

22.7%

Ringgold

1,202

1,017

185

18.2%

Sac

3,112

2,678

434

16.2%

Scott

4,167

3,697

470

12.7%

Shelby

2,614

2,227

387

17.4%

Sioux

3,434

3,072

363

11.8%

Story

3,362

2,873

489

17.0%

Tama

2,760

2,369

391

16.5%

Taylor

1,629

1,436

193

13.5%

Union

1,684

1,497

187

12.5%

Van Buren

1,614

1,355

260

19.2%

Wapello

1,969

1,764

205

11.6%

Warren

2,395

2,124

270

12.7%

Washington

2,915

2,546

369

14.5%

Wayne

1,312

1,208

104

8.6%

Webster

3,394

2,825

569

20.1%

Winnebago

2,725

2,368

357

15.1%

Winneshiek

2,269

1,904

365

19.1%

Woodbury

2,395

2,039

355

17.4%

Worth

2,708

2,215

493

22.3%

Wright

3,358

2,804

553

19.7%


ml: imajor

Extension programs are available to all without regard to race, color, national origin, religion, sex, age, or disability.

News Menu | ISU Extension