Farmland Values Jump 12 Percent in Corn Belt
Farmland Values Jump 12 Percent in Corn Belt
Farmland values rose 12 percent in 2022 in the Seventh Federal Reserve District, which encompasses all of Iowa and most of Illinois, Indiana, Michigan, and Wisconsin.
The Federal Reserve Bank of Chicago reported the news in its February 2023 Ag Letter, noting the increase marks the second-largest farmland value spike for that district in the last decade.
The 2022 increase was topped recently only by the record-breaking gains of 2021, a year that saw farmland values in the Seventh District rise by 22 percent.
Iowa Farm Prices Soar
The data, derived from the Fed’s monthly survey of 147 agricultural bankers, is not surprising to anyone paying attention to land prices in the Corn Belt recently. Last year, auctions across the Midwest saw land fetching record-setting prices, including as much as $25,000 to $30,000 per acre in Iowa.
In fact, land prices were so robust for key tracts of farmland in Iowa last year that the statewide average land cost hit $11,411 per acre — the highest per-acre statewide average reported since data collection began in the 1940s, according to the Iowa State University Land Survey.
Commodities Market Driving Demand
In its January Land Values Release, Farmers National Company’s Senior Vice President of Real Estate Operations Paul Schadegg projected continued strong values for Corn Belt land going into 2023.
“Commodity markets will continue to be the main driver in land value,” Schadegg said, adding that the scarcity of available tracts is also helping increase sales prices. “What we are seeing is a true supply/demand scenario,” he said. “There are simply more buyers willing to bid on the limited amount of land coming to the market.”
Considering the Year Ahead
Writing for the Federal Reserve, senior business economist David Oppedahl reported similarly optimistic land value expectations among the agricultural bankers whose survey responses form the bases of the Fed’s monthly ag letter.
Specifically, 16 percent of Fed respondents expected farmland values in the Seventh District to rise between January and March 2023, while 10 percent expected them to fall, and 74 percent expected them to be stable, Oppedahl wrote.