Farmland value jumps
Melanie Kucera - The Daily Iowan
Issue date: 2/14/08 Section: Metro
While large portions of the national economy are slowing, one part of the economy is skyrocketing - the value of farmland.
Economists at Iowa State University found that from 2006 to 2007, farmland prices rose by double digits across the state - ranging from 10 to 30 percent increases.
Johnson County farmland prices increased 17.1 percent, to more than $4,500 an acre.
The Iowa Land Value Survey, established in 1941, each year on Nov. 1 sends out approximately 1,100 opinion surveys to farm managers and rural appraisers. Roughly 600 surveys are sent back to the researchers, and data are calculated and made public by the middle of December.
Mike Duffy, an ISU professor of agricultural economics and lead researcher on the survey, said that though there was a drastic increase in farm value, the numbers did not surprise him.
He singled out ethanol as the major reason for the increase. And he expects land values to increase until corn goes out of vogue for ethanol use.
Though the rest of the economy is suffering, he said, the ethanol demand is separate.
"Congress passed a mandate that we had to use so much biorenewable fuels, so Congress created a demand for ethanol," Duffy said. "That is independent of what is happening in the rest of the country."
Other reasons for the rise include the increasing demand for recreational areas and urban development, he said, noting that farmland prices in Johnson County may have gone up because of Iowa City growth.
"It is all based around the booming prices that we have or are experiencing for commodities such as corn and soybeans," said Joseph Prusacki, the director of the statistics division of the National Agricultural Statistics Service, a division of the Department of Agriculture.
Northwestern Iowa has seen the biggest increases in land values across the state.
Nationally, Duffy said, he sees some variation in land values, saying that the New England states as well as California have seen increases, but the Southern states have not. Midwestern states, mainly Iowa, have led the way, he said.
"Iowa was kind of the center of the ethanol boom, but other states are catching up," he said.
The considerable increase in farmland value has affected farmers across the state in many ways.
Keith Gehling, a risk-management consultant in West Des Moines who consults with Iowa farmers, said he has seen an increase in the demand for people in his occupation.
"People are looking for help and trying to manage their risk," he said.
"The farmers who own their land, I would say, are making more money. "The younger farmers are concerned about high land prices, because people in their 30s can't afford to buy $5,000- to $6,000-an-acre land."
E-mail DI reporter Melanie Kucera at:
melanie-kucera@uiowa.edu
Economists at Iowa State University found that from 2006 to 2007, farmland prices rose by double digits across the state - ranging from 10 to 30 percent increases.
Johnson County farmland prices increased 17.1 percent, to more than $4,500 an acre.
The Iowa Land Value Survey, established in 1941, each year on Nov. 1 sends out approximately 1,100 opinion surveys to farm managers and rural appraisers. Roughly 600 surveys are sent back to the researchers, and data are calculated and made public by the middle of December.
Mike Duffy, an ISU professor of agricultural economics and lead researcher on the survey, said that though there was a drastic increase in farm value, the numbers did not surprise him.
He singled out ethanol as the major reason for the increase. And he expects land values to increase until corn goes out of vogue for ethanol use.
Though the rest of the economy is suffering, he said, the ethanol demand is separate.
"Congress passed a mandate that we had to use so much biorenewable fuels, so Congress created a demand for ethanol," Duffy said. "That is independent of what is happening in the rest of the country."
Other reasons for the rise include the increasing demand for recreational areas and urban development, he said, noting that farmland prices in Johnson County may have gone up because of Iowa City growth.
"It is all based around the booming prices that we have or are experiencing for commodities such as corn and soybeans," said Joseph Prusacki, the director of the statistics division of the National Agricultural Statistics Service, a division of the Department of Agriculture.
Northwestern Iowa has seen the biggest increases in land values across the state.
Nationally, Duffy said, he sees some variation in land values, saying that the New England states as well as California have seen increases, but the Southern states have not. Midwestern states, mainly Iowa, have led the way, he said.
"Iowa was kind of the center of the ethanol boom, but other states are catching up," he said.
The considerable increase in farmland value has affected farmers across the state in many ways.
Keith Gehling, a risk-management consultant in West Des Moines who consults with Iowa farmers, said he has seen an increase in the demand for people in his occupation.
"People are looking for help and trying to manage their risk," he said.
"The farmers who own their land, I would say, are making more money. "The younger farmers are concerned about high land prices, because people in their 30s can't afford to buy $5,000- to $6,000-an-acre land."
E-mail DI reporter Melanie Kucera at:
melanie-kucera@uiowa.edu
Be the first to comment on this story