DES MOINES — A report on national farmland values shows prices are holding their own despite several down economic issues.
Peoples Company president Steve Bruere says 2023 has been a transitional year for farmland after seeing so many transactions in 2022. “As the interest rates have started to move up in 2023, there’s a lot of folks I think, anticipated that farmland values would soften a little bit in the higher interest rate environment. And what’s happened as farmland is performed really well over the last year,” Bruere says.
He says their report is not a survey, but reviews all types of sales information and other factors. Iowa’s cropland has held its own along with the rest of the country. “Iowa values were relatively flat to stable and 2023. But I’ll tell you the last two or three weeks, there’s been over one-thousand acres that have sold in Iowa that have brought over $20,000 an acre,” he says. “So there’s plenty of ammunition out there and there’s still some really big numbers floating around.”
The report shows Iowa cropland values overall up 8% this year. Bruere says the value of cropland can’t just be viewed based on the return you get from farming the ground. “I think that’s one of the misnomers on farmland is a lot of times people look at farm in Iowa and say, well, that’s a two or three percent return. Well, the last 20 years Iowa farmland has averaged about seven percent appreciation. And so what this report does is aggregate those two returns,” he says.
Bruere says the ups and downs of corn and bean prices are only a part of figuring the value of farmland. “It’s much more than just interest rates and commodity prices. I think that’s what shocked people about this year, if you were looking solely at commodity prices and solid interest rates, you might think that land values are softened a little bit,” he says. “But when you when you start to understand what’s happening in the renewable space with wind and solar and carbon, and what you’re seeing with advances and yields and whatnot, that long term vision for farmland is pretty bullish.”
And there’s a limited number of acres to buy as he says only about one percent of all farmland in the country hits the open market on an annual basis. “There’s very little of it for sale, it’s a generational asset. So when it comes time to buy, something, you are really buying the future revenue stream,” he says.
You can find out more about their land value report at the Peoples Company website.