The average value of an acre of Iowa farmland declined for the third year in a row—the first time this has happened since the 1980s farm crisis—and is now estimated to be $7,183 per acre, according to the 2016 Iowa State University Land Value Survey. The statewide per acre value declined $449, or 5.9%t, since November, 2015. Farmland values hit a historic high in 2013, but have steadily declined since then, reports survey coordinator Dr. Wendong Zhang, Assistant Professor of Economics.
The statewide average value for an acre of farmland is now down about 17.5% from 2013, Zhang notes. The $7,183 per acre, and 5.9% drop in value, represents a statewide average of low-, medium-, and high-quality farmland. The survey also report values for each land quality type, crop reporting district and all 99 counties individually.
Average farmland values hit a historic peak of $8,716 per acre in 2013, but declined 8.9% in 2014, 3.9% in 2015 and have now fallen an additional 5.9%. “The golden era of phenomenal, yet abnormal, growth in farm income and land values, as we saw from 2006 to 2013, is already behind us. The land market is going through an orderly adjustment while the US agricultural sector, a competitive industry, is trying to adjust to the old normal of zero industry-wise net profits,” states Zhang.
“For a pessimist, there are reasons to worry, especially for landowners and/or producers who are over-leveraged. For an optimist, this decline is still modest, and the probability of a replay of the 1980s farm crisis is low.” Zhang says the likelihood of another farm crisis is low due to steady farm income accumulation before the downturn, a stronger government safety net, and an overall lower debt level in the agriculture sector.
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