DES MOINES (AP) — A new report says Iowa’s average farmland values fell 11 percent over the past year after a drop of 4.6 percent a year earlier.
The Des Moines Register reports that the Realtors Land Institute says the new average per-acre figure is $7,372, compared with $8,286 a year earlier.
Kyle Hansen with the Realtors Land Institute says farmland values could drop up to 20 percent more over the next three years, depending on the direction of commodity prices. Corn and soybean prices have declined 40 to 50 percent since their high in 2012.
Nationally, farm income is projected to drop 32 percent this year on top of a 16 percent decline in 2014. Recent data for Iowa farm income is only available through 2013, when it increased 20 percent to almost $10 billion.
It is predicted that the decline in values will affect farmer confidence in spending on tractors, combines and other equipment.
“Farmers get a lot more conservative,” said Ed Kordick, commodity services manager at Iowa Farm Bureau Federation. “We’re getting back to our thin years.”
Hansen says the smallest decline in annual land value was 2.5 percent in the southeastern portion of the state due to a strong cattle production.
Michael Swanson, a Wells Fargo agricultural economist, says that the decline of farmland values will be significant in Iowa and elsewhere.
“When you start using $3 for a bushel of corn, it’s got a different outlook than a $5 or $6,” he said. “I think there’s still a considerable downside.
Despite the bleak outlook, Hansen and Swanson believe that Iowa farmers should be able to weather the financial challenges. Hansen says local farmers have used strong returns over the last few years to help reduce their debt.
“A little correction is never a bad thing,” said Mark Kenney, a central Iowa farmer. “Things continuing to increase is never a good thing in the long run.”