Montgomery Co. farmland increase outpaces state

AMES — Montgomery County farmland value increased nearly 20 percent in 2010, outpacing the state average of 15.9 percent, according to an annual survey.
The Iowa State University Extension survey reports the 2010 price for an acre of farmland in Montgomery increased to $4,151 in 2010, compared to $3,476 in 2009. The $675 increase represents a 19.43 percent jump.
Statewide, average land value as of Nov. 1 this year was $5,064 an acre, up $693 per acre from 2009.
The 2010 survey shows a substantial increase in land values following a drop in 2009.
“We need to watch the land values and be prudent, but I don’t think we need to be overly pessimistic there will be a crash in values anytime soon,” said Mike Duffy, ISU Extension economist who conducts the study. “The rate of increase in 2010 appears high, but it is half the yearly increases in 1973, 1974 and 1975.”
Concidentally, Page and Mills Counties recorded the exact same percentage increase, 19.43, in farmland value as Montgomery.
The Southwest District reported a 21.5 percent increase, the largest in Iowa.
Duffy said it is important to remember the time span when evaluating survey results.
“This has been especially true the past few years when corn and soybean prices have varied considerably. Monthly prices for corn averaged 37 percent higher July to November this year compared to average monthly prices from January through June. Soybean prices are 21 percent higher over the same time span,” he said.
The survey conducted by Duffy is sponsored annually by the Iowa Agriculture and Home Economics Experiment Station at Iowa State University. Only the state average and the district averages are based directly on the ISU survey data. The county estimates are derived using a procedure that combines the Iowa State survey results with data from the U.S. Census of Agriculture.
Of the nine crop reporting districts in the state, the Iowa State survey found the highest land values were reported for Northwest Iowa at $6,356 per acre; the lowest land values were reported for South Central Iowa at $2,690 per acre.
The highest county average in the state was O’Brien County at $7,148 per acre, up 16.2 percent from 2009. Decatur County had the lowest average at $2,085 per acre and the lowest dollar increase at $128 per acre. The greatest dollar increase was $1,152 in Wright County; the highest percentage increase was in Kossuth County at 21.9 percent.
Duffy said land values should remain strong at least for the next several months. Beyond that there is a fair degree of uncertainty with respect to whether land values can maintain their current levels.
The volatility in corn and soybean prices and production costs lead to tremendous uncertainty and volatility in the land market, as historically reflected in the Iowa State survey. Land values were up 22 percent in 2007, down 2.2 percent in 2009 and up 15.9 percent in 2010. Since 2004, Iowa land values are up 93 percent.
“In addition to the volatility in prices and costs, there has been a substantial shift in the fundamental supply and demand situation for farmland,” said Duffy. “Over 60 percent of the 2009 respondents indicated there were fewer sales in 2009 compared to 2008. This was the largest drop in sales reported in the Iowa State survey. In 2010, almost three-fourths of the respondents said sales were either the same or less than 2009. This shows the slump in sales is either continuing, or in some cases worsening, throughout the state.”
Data on farmland values have been collected by Iowa State University annually since 1941. About 1,100 copies of the survey are mailed each year to licensed real estate brokers, ag lenders and others knowledgeable of Iowa land values. Respondents are asked to report values as of Nov. 1. This year 479 usable surveys provided 627 individual county estimates.
Additional information on the 2010 survey and an archived version of Duffy’s news conference announcing the results are available online at www.extension.iastate.edu/landvalue/