Iowa Farmland Ownership

Contributed by Mike Duffy, Extension Farm Management Specialist, mduffy@iastate.edu.

duffyFarmland is the major resource for Iowa.  Who owns the land and how it is farmed determines what kind of agriculture we have across the state. Every five years Iowa State University does a survey to examine the ownership of Iowa farmland.

The Iowa farmland ownership survey examined land ownership as of July 1, 2012. The final report (Farmland Ownership and Tenure in Iowa, 2012 – publication PM 1983 revised) will be available in the coming months.

One of the interesting aspects of the 2012 survey is that it shows the changes in land ownership patterns over a boom period. The last ownership survey was done in 2007 and during the intervening five years Iowa farmland values more than doubled going from $3909 per acre to $8296. This increases rivals any similar time period.

The latest Iowa farmland ownership survey is compared to previous surveys dating back to 1982, during the time when farmland values first started collapsing after the boom of the 1970s. Looking at the various surveys over the past 30 years shows some of the changes in farming technology, demographics and other patterns. The 2012 survey also shows the impact of the current land boom on these trends.

Iowa farmland is increasingly in the hands of the elderly.  In 2012 30 percent of Iowa’s farmland was owned by someone over the age of 75 years old. The percent of land owned by people in this age category had been steadily increasing since 1982, when 12 percent of the land was owned by someone over 75 years old. The trend towards increasing age does appear to have been slowed by the boom. There are younger owners although they represent a small percentage of the acres. Over half, 56 percent, of the farmland in Iowa is owned by someone over the age of 65.

Another trend that seems to have slowed is the percent of land owned by people who don’t live in Iowa full time.  In 2012, 21 percent of the farmland in Iowa was owned by someone who didn’t live in the state or only lived in Iowa part time.  This was the same percentage as found in the 2007 survey. However, in 1982, only 6 percent of the land was owned by someone who didn’t live in Iowa or only lived here part of the time. It appears that the higher land values had an impact on the ownership by non-Iowans.

Ownership of Iowa’s farmland and access to the use of the land is critical for the future of the State. The impact of the ownership on both beginning farmers and the retiring farmers will be crucial. The current situation with respect to farmland ownership in Iowa is a good topic for discussion among landlords, family or heirs, and agribusiness professionals.

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Farmland Values Continuing to Rise

Mike Duffy
Mike Duffy

Contributed by Mike Duffy, Extension Farm Management Specialist, mduffy@iastate.edu.

Participants at this year’s Iowa State University Soil Management and Land Valuation (SMLVC) conference projected Iowa farmland values would average $9,425 per acre on November 1st of this year.  This would represent a 14% increase over the Iowa State University land value survey the increase would be from November to November.

The conference participants also estimate land values 18 month in advance.  The estimate for November 1st 2014 is an average $10,042 per acre.  This is a 6.5% increase over their projection for November 1st 2013.

The SMLVC is the longest running conference at Iowa State.  This was the 86th year.  Since 1964 the participants, mostly farm managers, rural appraisers, lenders and real estate brokers, have been asked to project land values 6 and 18 months in advance.  In addition they are asked to estimate the value for two distant years.  The conference is approved for continuing education credit for real estate brokers and appraisers.  This year 280 people attended the conference.

The participants are usually very accurate for the 6 month projection.  Since 1964 the 6 month projections have averaged 2% below the final Iowa State land value estimate.  The group is slightly worse for the 18 month projection averaging 6% below the ISU value.  For the past decade the group has averaged only 1% higher for 6 month projection but the 18 month projections over the past decade have averaged 9% below the final ISU land values for that year. 

The estimates have varied widely in times of rapidly changing land values.  The group missed the major turns in land values over the past 50 years.  Nonetheless they have averaged very close to the final land value for the year.

The group projected the high one-third of Iowa farmland would average $11,599 per acre on November 1, 2013.  They also projected the average and low third would be $9,260 and $7,379 per acre respectively. 

What will land values do in the coming months is an open question.  Will the experts’ projection miss a major turn or will they continue to be quite accurate with their forecasts?  No one knows for sure but the groups’ projections do represent the collective thinking of a large number of farmland experts in Iowa.

There is considerable discussion whether or not Iowa farmland is on a speculative bubble.  For now the fundamentals of high income and low interest rates continue to hold.  For how long is a legitimate question but at least for now the experts expect land to continue to increase but at a slower rate.

Ag Decision Maker (AgDM)

An agricultural economics and business website.

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