Farmland Prices Have Stabilized In Iowa

Farmland Prices Have Stabilized In Iowa

Land prices and demand for farmland remained stronger than expected in first-half 2014, says Farm Credit Services of America.

Prices and demand for farmland stayed strong during the first six months of 2014 in the four-state territory served by Farm Credit Services of America. FCSAmerica, a leading farm lender in the region, issued that announcement July 16. Farmland values appear to have stabilized in Iowa, where the market had shown signs of softening in the last half of 2013. In Nebraska, South Dakota and Wyoming, land values continued to increase during the past 6 months, according to data compiled by FCSAmerica.

IOWA HOLDING STEADY: Farmland prices stabilized in Iowa, and increased in Nebraska, South Dakota and Wyoming during first 6 months of 2014. That's according to FCSAmerica's benchmark data survey, which is updated January 1 and July 1 each year.

Looking at the results of FCSAmerica's benchmark survey (see accompanying table)  for each of the four states, Iowa farmland values were down less than 1% on June 30, 2014 from where they were January 1, 2014. Iowa land values were down 3.7% for the 12 month period July 1, 2013 to June 30, 2014. Thus, land values have held fairly stable instead of falling significantly as some people had predicted.

Crop prices are down, but farmers aren't holding as much debt
In recent weeks corn and soybean prices have declined significantly on signs of a big 2014 U.S. crop currently developing in the fields, but FCSAmerica officials remain confident their farmer-customers will be able to avoid significant financial problems. Thanks to strong farm income the past few years farmers have been able to pay down debt and don't owe as much money as they did during past periods of low crop prices. Today, farmers generally have a much more favorable debt-to-asset ratio. Also, interest rates have remained low for borrowers.

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FCSAmerica reports the number of farmland auctions during first half 2014 remained at 2013 levels in Iowa, Nebraska and South Dakota after dropping 25% from a historic high in 2012. Cropland in these three states accounted for the greatest gains in farm value from January 1 through June 30, 2014. In Wyoming, much of the increase in farm values was driven by strong livestock prices, the benchmark survey data shows.

Accurate benchmark for land values and real estate trends
These findings are based on FCSAmerica's semi-annual appraisal of 64 farms identified as benchmarks for land value and real estate trends. The FCSAmerica appraisal team updates values for its benchmark farms based on real estate sales through January 1 and July 1 of each year, providing one of the most current and accurate agricultural real estate valuation databases in the Midwest.

Lower commodity prices in the last half of 2013 had led to reports in early 2014 of more cautious land buyers and declining farmland values. But several years of record high profitable production and low interest rates continued to positively impact the farmland market through June this year. As a whole, the 64 benchmark farms rose in value by 2.4% in the first six months of 2014.

The chart below shows the average change in benchmark farm values by state. The number of benchmark farms for each state is shown in parenthesis. 

 State

Six Month   

One Year   

Five Year   

Ten Year

Iowa  (21)

-0.9%

-3.7%

103.0%

245.5%

Nebraska  (18)

1.5%

2.2%

143.6%

314.7%

South Dakota  (23)

5.8%

13.6%

117.2%

332.7%

Wyoming  (2)

5.8%

9.5%

7.8%

68.6%

 About Farm Credit Services of America: Farm Credit Services of America is proud to finance the growth of rural America, including the special needs of young and beginning producers. With assets of more than $21 billion, FCSAmerica is one of the region's leading providers of credit and insurance services to farmers, ranchers, agribusiness and rural residents in Iowa, Nebraska, South Dakota and Wyoming. Learn more at www.fcsamerica.com.

TAGS: Soybean
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