Farmland in Iowa is worth an average $9,751 an acre – the highest value since Iowa State University began the annual survey in 1941. Values skyrocketed by 29 percent this year, fueled by high commodity prices, better than expected crop yields and large pandemic relief payments, said associate professor Wendong Zhang.
The ISU survey, based on reports from appraisers, farm managers, ag bankers and other agricultural professionals, matched the heady increases reported by four regional Federal Reserve banks last month. They said cropland in the Midwest and Plains rose by a sharp 15 percent, on average, from fall 2020. The largest increases were in Iowa, up 28 percent, Minnesota, up 26 percent, and South Dakota, up 23 percent.
The percentage increase in Iowa farmland values was the largest since a 32.5 percent gain in 2011 near the peak of the commodity boom. This year’s rise was aided by low interest rates and intense competition for the small amount of land that was offered on the open market.
“Inflation is driving some investors to consider farmland as an alternative investment asset because farmland value tends to rise with higher inflation,” said Zhang.
Participants in the ISU survey said they expected land values to increase by less than 10 percent in 2022.
“Looking ahead, upward pressure on farmland values will likely continue into 2022,” wrote economist David Widmar at the Agricultural Economic Insights blog. “What’s unclear is how much higher farmland values might turn and how long the upturn might last.” Over the past decade, the Midwest and Plains states showed the largest increases, he said.
The portal for the ISU farmland survey is available here.