Iowa farmland prices drop 2 percent

    Iowa farmers saw their annual land values decline for the first time in a decade, according to an annual survey conducted by Iowa State University Extension. The extension?s survey indicated that average land values in the state dropped 2.2 percent, from $4,468 an acre to $4,371, over a 12-month period beginning Nov. 1, 2008.

    The average value of farmland in Washington County dropped 2.7 percent in that time, from $4,734 an acre to $4,867. Washington is still above the average value for southeast Iowa, which the survey indicated was $3,832. Farmland values in southeast Iowa are down 2.1 percent, less than half the decline suffered by central Iowa, which is down 4.8 percent. Central Iowa still has the second highest average land value at $5,026, behind northwest Iowa at $5,364. South central Iowa has the lowest land value of any district at $2,537 per acre.   

    Of the nine districts in Iowa, only one saw an increase in its farmland value from 2008, and that was the east central district.

    Mike Duffy, the ISU Extension farm economist who conducts the survey, said farm values in east central Iowa rose in 2009 because the area was recovering from the damaging 2008 flood, which caused prices to drop substantially that year.

    The variability in land value from one part of the state to another can be explained by soil quality and topography, said Duffy. Southeast Iowa has rougher ground and more hills than the high-yielding farmland in northwest Iowa, which is why southeast Iowa?s land values aren?t as high. He said that, even though southern Iowa is warmer, its soil is not as good as that of northwest Iowa. Like southeast Iowa, northeast Iowa is also hilly, which holds down its yields and consequently its land value.

    ?It used to be that farm ground was worth more if it was near a river,? said Duffy. ?Now that we have ethanol, we don?t have to ship things as far, so that has had an impact on land values.?  

For the full article, see the Dec. 17 edition of the Washington Evening Journal.