DES MOINES, Iowa — Values of Iowa farmland have increased this year, reversing several years of declines, but industry experts say the change likely isn’t a signal that the agricultural economy is improving.
Steve Bruere is president of Peoples Co., a farm management and brokerage firm. He told The Des Moines Register that a lack of farms on the market has driven up the value.
Farmland values climbed nearly 3 percent to almost $6,700 an acre for the year ending in September, according to the Realtors Land Institute’s Iowa chapter.
The state’s increase in farmland value may be temporary, said Chad Hart, an agriculture economist at Iowa State University. Agriculture values typically increase because a farmer can generate more income from the land, he said. However, agriculture income in the state is under stress, he said.
Farm income dropped in 2011 after a drought increased corn and soybean prices. Iowa agricultural income has dropped nearly 70 percent since 2013, bringing in $2.6 billion last year.
The U.S. Department of Agriculture predicted last month that U.S. farm income would increase about 3 percent this year because of a predicted increase in profits for cattle, pigs, poultry and other livestock.
Hart said he’s unsure if Iowa will see such improvements because of this summer’s drought conditions. Farmers will likely have a hard time making profits this year and next year, he said.
“We’re seeing a few more farmers than usual getting out of the business, which makes sense, given the tough financial conditions,” Hart said.
Bruere said if a downturn in the farm economy continues, farm sales may increase and values would be reduced.
“I don’t think we’re out of the woods yet,” he said.
Information from: The Des Moines Register, http://www.desmoinesregister.com