tractor in field
THIN PROFITS: Some farming operations are having trouble securing operating capital, so they are selling some land.

Market staying stable

Low crop prices continue to keep a lid on land values

The farmland market across Iowa remains stable. With spring near, farmers are busy in the fields, which marks the end of the traditional farmland “sales season” of September to March.

During this sales time, most farms on the market sell. With crops harvested, seeing a parcel of land is much easier. Also, in winter when most farm leases have expired, the sale process is less encumbered. Farmland sales do occur year-round — just not as many during the growing season as the off-season.

The highest-quality farms from a production standpoint (highly productive soils, good fertility and drainage) continue to sell well and outperform those farms with waterways, other obstructions or poor soils. Both farmers and investors are active in today’s market, although farmers are the more prevalent buyer. Low interest rates, good crop yields in both 2016 and 2017, and a meaningful grain market rally since the beginning of 2018 are helping to support the Iowa farmland market.

There are also negative influences that are pressuring farmland values. Primarily, low commodity prices throughout much of the past three to four years, combined with several consecutive years of weak on-farm profitability as a result, continue to keep a lid on land values. In addition, some locales have seen a spike in the number of sales, which has drawn significant local capital out of the local market. In neighborhoods where several sales have occurred, this may be a marker for potential farmland price weakness on other upcoming sales.

Lastly, thin profits for some farming operations may be creating an environment where farmers need to liquidate a farm (or other assets) to secure operating capital. If this begins to occur on a widespread basis, the farmland market may see increasing price pressure. For landowners concerned about farmland values dropping in the future, now may be a logical time to consider selling.

NORTHWEST

Pocahontas County: East of Varina, 115 acres recently sold at public auction for $7,550 per acre. The farm has 111 tillable acres with an 86.8 CSR2 on primary soil types of Webster, Clarion and Nicollet. The sale equals $90 per CSR2 point on the tillable acres.

NORTH CENTRAL

Worth County: Southeast of Northwood, 70 acres sold at public auction for $8,600 per acre. The farm consists of 67 tillable acres with an 85.5 CSR2. It also has a $200-per-crop-acre cash rent lease in place for 2018, with the rent going to the buyer of the farm. In addition, there were 13 years remaining on a wind turbine overhang easement that pays a guaranteed $27.53 per gross acre in 2018 (along with an escalator clause for future years). The sale equals $105 per CSR2 point on the tillable acres.

NORTHEAST

Fayette County: South of West Union, 40 acres recently sold at public auction to a local farmer for $10,050 per acre. The farm has 39.5 tillable acres with a CSR2 of 87.2 so the sale equals $117 per CSR2 point on the tillable acres.

WEST CENTRAL

Sac County: West of Sac City, 153 acres sold for $7,300 per acre. The parcel consists of 150.7 tillable acres, of which 25.9 acres are enrolled in CRP, with an average CSR2 of 79.1. The sale equals $94 per CSR2 point on the tillable acres.

CENTRAL

Dallas County: South of Dawson, 174 acres sold in two parcels. Parcel 1 is 40 gross acres with 39.2 tillable acres with an average CSR2 of 87.8. It sold for $10,950 per acre. The sale of Parcel 1 equals $127 per CSR2 on the tillable acres. Parcel 2 is 133.57 gross acres, with 115.1 tillable acres with an average CSR2 of 86.8. It sold for $8,300 per acre. The sale of Parcel 2 equals $111 per CSR2 on the tillable acres.

EAST CENTRAL

Benton County: North of Keystone, 176 acres sold at public auction for $14,300 per acre. The farm has an average CSR2 of 91.6 and 170.2 tillable acres. The sale equals $161 per CSR2 point on the tillable acres.

SOUTHWEST

Mills County: Northwest of Tabor, 135 acres sold at public auction for $3,850 per acre. The farm is 87 tillable acres, of which 59 acres are enrolled in CRP, with an average of 54.2 for the CSR2 rating. The sale equals $110 per CSR2 point on the crop acres.

SOUTH CENTRAL

Warren County: Southeast of Hartford, 80 acres sold for $12,100 per acre. It was offered in two 40-acre auction parcels, but the land sold together to a single buyer. The parcels consist of 72.9 tillable acres with a combined CSR2 of 89.1. The sale equals $149 per CSR2 point on the tillable acres.

SOUTHEAST

Washington County: South of Washington, 42 acres sold for $4,850 per acre. The farm has 32.3 tillable acres with an average CSR2 of 79.3, but all the tillable land is enrolled in CRP with a total annual payment of $5,842. The sale equals $79 per CSR2 point on the tillable acres. 

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Visit hertz.ag.

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