Land Values on the Rise = Bummer for the Beginning Farmer

Today I had to make the drive down to the family farm to do a couple things for my dad and check out the cows (more on the cows tomorrow). As part of the trip I picked up their mail, because they are out of town, and started looking through an issue of the Iowa Farm Bureau Spokesman. In the middle of the front page is a big headline, "Iowa farmland values increasing at record pace." Good news for some ... not so good news for a beginning farmer!

Here are some farmland average prices from around the state. In Marion county, where I live and would like to buy, the average price for acre is $3,555 which is an increase of 21.5% over last year. Up in Black Hawk county, where I'm from originally, land is a whopping $5,083 per acre (average). That Black Hawk county number is up 28.6%. The highest priced farmland in the state ... Sioux county at $5,204 per acre! Just let these numbers sink in:

• The average increase of $704 per acre is the highest in the 66-year history of the survey.



• The state average is $3,908 per acre, 22% more than last year.



• Since 2000 Iowa's average acre of land has increased by $2,051.



• There are 99 counties in Iowa ... in 2007 51 of those counties had average land prices between $4,000 and $5,000.

Do you want to know why these land prices are going up at such drastic rates? In one word ... CORN! Iowa has seen it's share of land price spikes ... and large falls (the farm crisis of the 80's), but this seems to be different. Most analysts tell us that the current increases are not tied to an increase in farm debt like in the 70's and 80's. Also, those who study these things believe we haven't hit the top yet!

So, what does this mean? As I mentioned earlier this is a good thing for those that are selling land I guess, but for a guy like me that would like to buy some land in the future it is sobering news to say the least.

As I read the article I was reminded of all the advice I had read in books over the past year. Joel Salatin, Allan Nation, Gene Logsdon, and others always tell you to rent land if you can't buy land to get your start ... that advice has never been more correct at a time like this ... except for one thing. One thing that they weren't able to factor in because their books were written years ago is that rent prices are on the rise. Mike Duffy, who works for the ISU Extension, expects cash rent prices to go up 25% in the coming year.

So, what is a beginning farmer to do ... especially if they don't want to raise corn in a corn crazy state? Well, I'll just keep on doing what we are doing now and see how the chips fall. The increasing land prices will make it more difficult for young beginning farmers to get a start, but I don't think it is the end all. In reality, I can hope for the bubble to burst or for a market correction, but I'm not sure if that will happen anytime soon!

Just some sobering news for the day ... but, to keep things in perspective I'm sure that land has crazy prices elsewhere too. If you know what average land prices are for farmland in your area let us know!