Futures |  Weather |  Grain |  Market News |  DTN Ag Headlines |  US Ag News |  Headline News |  Portfolio |  Livestock |  Options 
     
  Home  
  UC Story  
  Feed  
  Grain  
  Agronomy  
  Propane  
  Fuel  
  Lubricants  
  Cenex/Retail  
  Cash Bids  
  Locations  
  Trucking  
  Ethanol  
  Newsletter  
  Careers  
  News  
  Community giving  
  What is a cooperative?  
  Links  
  Contact Us  
- DTN Headline News
Iowa Land Values Take a Hit
Wednesday, April 1, 2015 1:00PM CDT

By Elizabeth Williams
DTN Special Correspondent

AMES, Iowa (DTN) -- Iowa farmland values slid 7.6% in the past six months, down an average 11% from a year ago, and roughly back to the level they were in 2012, reported a survey by the Iowa Realtors Land Institute Monday.

A correction in land is not necessarily a bad thing, noted some farmland realtors. "It recognizes the current economic situation, and [the drop in values] is not debt-driven. Farmland is still in strong hands," explained Roger Johnson with Farmers National Company in Cedar Falls.

One bright spot in the survey: Pasture land held its value or slightly improved -- aided by the profitable cow/calf industry. Hardest hit (down 17.5% since March 1, 2014) was northeast Iowa that has had only one good growing season out of the past four and has a higher concentration of dairy, explained Kyle Hansen of Hertz Real Estate Services, who coordinated the Iowa survey for the Realtors Land Institute.

Cash rents have also backed down. "But it depends on where they started," said Sam Kain with Farmers National Company in West Des Moines. "If they were $400 to $500 an acre in 2014, they've probably backed off quite a bit. If they were $300 to $325 an acre, they probably didn't back down that much," said Kain.

It also depends on when you negotiated your lease, added Johnson. Most rents were negotiated last fall and if they were lowered, they came down at most $50 to $75 an acre. Kirk Weih with Hertz Farm Management in Mount Vernon agreed. "Last fall when we worked with our tenants and landowners, most of the lease adjustments were $10 to $25 to $40 per acre lower, depending on where you started and the history of the rent over the past three to five years," he said.

For leases that were negotiated late winter or in March, "some have dropped $100 per acre," reported Johnson in northeast Iowa. (See related DTN story, "Midwest Renters Send an SOS," on Land Management page http://bit.ly/….)

What about the farm tenants whose lenders wouldn't finance their March 1 rent payment and had to renegotiate or give up that land? That was only a small portion of the tenants, said Weih. "For most areas, I think it was more rumors than fact. True, some farmers didn't get the financing they needed. But if you didn't get your financing approved after the past three largely profitable years we've had in corn and soybeans, that tells you there's more to the story," said Weih. "While it did occur [farmers letting their rented land go], it wasn't significant enough to be a trend."

Weih believes cash rents will adjust down again in 2016 unless commodity prices turn around. "That's just the nature of a cyclical industry," he said.

Farmland values are also expected to be lower next year. The Iowa survey showed land brokers expect a 5% to 20% decline over the next three years. "Depending on commodity prices, we may see another 10% to 15% drop in land values in each of the next two years. But that's not 'falling out of bed.' It's simply a correction in the market," said Johnson.

Most of the recent buyers have been farmers, noted Kain. "And they generally never sell their land. So we're not going to see a lot of panic sales if values go lower. They may sell an 80-acre or 160-acre parcel to get more financially comfortable. But I don't see a return to the 1980s."

Kain added, "We've got two to three years when it's going to be very tight. But if you have 1,000 acres paid for and have little debt, you are set up for opportunity. The people I feel sorry for are the young farmers who tend to be the ones who pay the higher cash rent and have higher equipment costs. Most of the younger farmers have never seen bad times. We've been in a growth period since the mid-1980s."

For those who lived through the '80s, Elwynn Taylor, Iowa State University climatologist, told the group, we are returning to a similar volatile weather cycle for the next 20-25 years, beginning in 2012.

"If you've ever wondered how you would handle the 1980s if you had to do it again, well, you have to do it again," said Taylor. "If it scares you to manage yield and price risk, maybe you should do something else [besides farming]," he advised. However, this year's weather is shaping up to be an adequate moisture year for Iowa, said Taylor.

Realistic about the upcoming challenges in agriculture, Kain was philosophical. "One of the great things about the American way is that you can succeed or fail depending on your personal decisions and efforts," he said. "Those that have been good managers will weather the next few years. Those that have not may fail, creating opportunities for others to step in and succeed."

(MZT/AG)


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Katie Micik
Markets Editor
Monday, March 30, 2015 4:15PM CDT
Monday, March 30, 2015 4:14PM CDT
Monday, March 23, 2015 4:42PM CDT
Technically Speaking
Darin Newsom
DTN Senior Analyst
Wednesday, April 1, 2015 1:44PM CDT
Wednesday, April 1, 2015 1:12PM CDT
Wednesday, April 1, 2015 12:42PM CDT
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Monday, March 30, 2015 1:46PM CDT
Thursday, March 26, 2015 3:34PM CDT
Tuesday, March 24, 2015 1:46PM CDT
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Thursday, April 2, 2015 3:31AM CDT
Wednesday, April 1, 2015 11:43AM CDT
Tuesday, March 31, 2015 11:52AM CDT
Minding Ag's Business
Marcia Taylor
DTN Executive Editor
Tuesday, March 31, 2015 8:31PM CDT
Friday, March 27, 2015 6:25PM CDT
Thursday, March 26, 2015 3:44PM CDT
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Wednesday, April 1, 2015 3:18PM CDT
Monday, March 30, 2015 6:51PM CDT
Friday, March 27, 2015 7:23PM CDT
Wednesday, April 1, 2015 9:03PM CDT
Wednesday, April 1, 2015 6:02PM CDT
Tuesday, March 31, 2015 10:01PM CDT
DTN Production Blog
Pam Smith
Crops Technology Editor
Monday, March 23, 2015 7:17PM CDT
Tuesday, March 17, 2015 5:30PM CDT
Monday, February 23, 2015 6:43PM CDT
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Monday, March 23, 2015 9:25PM CDT
Friday, February 27, 2015 9:05PM CDT
Friday, February 20, 2015 5:15PM CDT
South America Calling
Alastair Stewart
South America Correspondent
Wednesday, April 1, 2015 10:46PM CDT
Monday, March 30, 2015 11:56AM CDT
Thursday, March 26, 2015 4:16PM CDT
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Wednesday, April 1, 2015 12:01PM CDT
Monday, March 23, 2015 11:12AM CDT
Monday, March 16, 2015 12:34PM CDT
Machinery Chatter
Jim Patrico
Progressive Farmer Senior Editor
Wednesday, March 25, 2015 3:53PM CDT
Monday, March 16, 2015 7:28PM CDT
Monday, March 9, 2015 7:34PM CDT
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Wednesday, April 1, 2015 10:06PM CDT
Tuesday, March 31, 2015 11:10PM CDT
Monday, March 30, 2015 10:14PM CDT
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Tuesday, March 31, 2015 6:59PM CDT
Friday, March 27, 2015 2:34PM CDT
Tuesday, March 17, 2015 8:14PM CDT
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN