An 80 acre parcel of land in Iowa's northwest corner brought a record $21,900 per acre Thursday, even after a disappointing summer provided low yields for many Midwest farmers.
The sale bested the standing Iowa record of $20,000 per acre, set last year in the same county.
Vander Werff and Associates of Sanborn, Iowa, managed the auction. The auctioneers reported that direct corn yield on the property is 100 bushels and direct soybean yield is 43 bushels. The FSA office listed the parcel as having 79 tillable acres.
Iowa Farm Bureau economist David Miller said the new record price isn't typical, but it is a reflection of optimism in the economic strength of farming in Iowa. He says low interest rates benefit land buyers.
"Seven dollar corn, $15 soybeans and 2% or less 10-year interest rates, all work together to push up the value of Iowa farmland," Miller said.
He added that there has been no indication that Iowa land has topped out in price, and good farmland in the $8,000 to $11,000 range, may go up another 5 to 7 percent in Iowa on a year-to-year basis. Yet, he says, though there are many factors that influence land price, some are thousands of miles away.
"Weather problems are creeping into Argentina and Brazilian crops, so if crop prospects in South America deteriorate again like they did last year, that's another element that would support these higher-than-normal prices for another six months to a year. Out-of-state investors who show up at these farm auctions will also drive up prices for Iowa farmers, who have been saving and working for generations to buy land and bring their children into farming. But, capital asset pricing is all about pricing future expectations; $21,000 an acre at an auction means that at least two bidders were pretty optimistic about the future," Miller said.
Michael Duffy of Iowa State University estimated typical farmland values in the Sioux County area at nearly $9,500 at the end of last year. He pointed to increases in gross farm income as key factor in rising farmland values, but like Miller says there are other financial reasons for the boost in values, including low interest rates.
ISU also lists typical cash rent in District 1, which includes Sioux county, at $267 an acre. That figure is $93 more than was typically paid in 2008.
The same report lists Sioux County's 2007-2011 average corn yield at 186 bu/acre. Soybeans came in at 55 bu/acre for the same time period. Average Corn Suitability Rating was listed at 66.