Two “I” states are separated geographically by a third, but they are also separated in another way right now: the direction of their land values.
Iowa farmland values have been dropping, while the state to the east of Illinois, Indiana, has seen its farmland values increasing.
Iowa was the only state of five in its region to drop in farmland values, according to the most recent Benchmark Farm Value Trends Report issued by Farm Credit Services of America and Frontier Farm Credit.
The report measured 70 benchmark farms in the five-state region.
ANOTHER PERSPECTIVE: Paul Schadegg, Farmers National Company Senior Vice President of Real Estate Operations, told American Farmland Owner in July, that his company’s survey found farmland values were settling. Watch our conversation here and why he thinks that buyers have been stepping back from farmland.
The Benchmark Farm Value Trends Report found that Iowa farmland values from January to June matched what they fell since July 1, 2023. Values dipped 2.4% over those periods.
The four other states in the survey all experienced rising farmland values in the first six months of this year.
Benchmark Farm Value Trends Report from January 1-June 30:
· South Dakota: +3.6%
· Wyoming: +2.7%
· Kansas: +2.2%
· Nebraska: +0.2%
· Iowa: -2.4%
Iowa also had the smallest growth among the five states over the previous two years. This was the first time in five years that Iowa’s farmland values dropped, according to the survey.
Benchmark Farm Value Trends Report from June 2022-June 2024:
· Kansas: +21.4%
· South Dakota: +21%
· Wyoming: +19%
· Nebraska: +13.5%
· Iowa: +1.4%
Responding to 2024’s farmland values, Tim Koch – executive vice president of business development for the two associations – said, “The combination of higher interest rates and tighter margins for grain producers is having an impact on cropland values.”
Meanwhile, Indiana is seeing steady gains in farmland values over the past year, according to the Purdue Farmland Value and Cash Rents Survey. The highest quality farmland is rising the most in value, according to the survey.
Purdue Farmland Value and Cash Rents Survey June 2023-June 2024:
· Top quality farmland: $14,392 (+4.8%)
· Average quality farmland: $11,630 (+3.7%)
· Poor quality farmland: $9.071 (+4.4%)
The survey notes that much of the increase in farmland values appears to have taken place during the second half of last year. The first half of 2024 has not experienced that level of growth in Indiana.
“A number of forces, such as high interest rates and lower farm incomes, are currently placing downward pressure on prices, but the limited supply of land is keeping prices firm,” the survey noted.
That downward price pressure will continue throughout the remainder of 2024, survey respondents predicted. But they felt that prices would remain above farmland values from June 2023.
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