By DOUG SCHMITZ

Iowa Correspondent

AMES, Iowa —The average value of an acre of Iowa farmland increased 2 percent in 2017, or $143 per acre, from a year ago, and is now estimated at $7,326 per acre – after falling the past three years, according to the 2017 Iowa State University Land Value Survey, released every mid-December.

Wendong Zhang, the ISU assistant professor of economics and extension farm management specialist who leads the year-end survey, said limited land supply is the main factor driving last year’s increase in farmland values.

“Commodity prices and farm income are still stagnant,” he noted. “I would not consider this a turn of the land market. Given the rising interest rates and stagnant farm income, I would not be surprised to see a continued decline in values in the future.

“This, to me, is a temporary break in a downward adjustment trajectory,” said Zhang, adding the results are consistent with findings by the Federal Reserve Bank of Chicago, the Realtors Land Institute and the USDA.

Initiated in 1941 and the first appraisal of its kind in the nation, the survey has been conducted every November since 2014 by ISU’s Center for Agricultural and Rural Development (CARD) and ISU Extension and Outreach.

Moreover, the survey is based on reports by agricultural professionals knowledgeable of land market conditions, such as appraisers, farm managers, agricultural lenders and actual land sales. It is intended to provide information on general land value trends, geographical land price relationships and factors influencing the Iowa land market.

In addition, the 2017 survey is based on 877 usable responses from 710 agricultural professionals, 64 percent of whom answered the survey online.

Zhang said the $7,326 per-acre estimate and 2 percent increase in value represents a statewide average of low-, medium- and high-quality farmland. The survey also reports values for each land quality type, crop reporting district and all 99 counties individually.

Starting in 2004, several factors, including the ethanol boom and historically low interest rates, drove five consecutive years of double-digit growth in average farmland values, culminating in an historic peak of $8,716 per acre by 2013.

As a result, Zhang said average farmland values then began an immediate decline, dropping 8.9 percent, 3.9 percent and 5.9 percent, respectively, in the following three years, which were the first time since the 1980s farm crisis that farmland values had declined three consecutive years.

Out of Iowa’s 99 counties, only Fremont, Mills, Montgomery and Page reported lower land values this year, reporting a decline in value of 0.3 percent. For the fifth year in a row, though, Scott and Decatur counties reported the highest and lowest farmland values respectively, with Decatur County reporting a value per acre of $3,480 – a gain of $37, or about 1.1 percent, from last year’s report.

Zhang said Scott County reported a value of $10,497, an increase of $162 per acre, or about 1.6 percent. Dubuque County reported the largest dollar increase in value, with a gain of $335 per acre. Allamakee and Clayton counties reported the largest percentage increase in values, at 4.7 percent.

Of the four counties that reported a decrease in value, Mills had the largest dollar decrease in value, losing about $25 per acre.

Of the nine crop reporting districts, only the South-Central District reported a decrease in average value, with values falling from $4,241 per acre in 2016 to $4,172 in 2017, a loss of 1.6 percent.

The Northwest District again showed the highest overall value – $9,388 per acre, up from $9,243 in 2016, a gain of 1.6 percent. The East-Central District showed the largest percentage gain in value, 3.8 percent, bringing average value there to $8,218.

Zhang said high-quality farmland saw the largest increase in value in the East-Central District (4.2 percent), and the largest decrease was in the South-Central District (1.2 percent). The low-quality farmland gained the most value in the Northwest District, with 3.3 percent; decreasing the most was the Southwest District, where it fell 6.1 percent.

Zhang said the most common positive factors influencing land prices noted by survey respondents were favorable interest rates, strong crop yields, limited land supply, strong demand and the availability of cash and credit.

Among the most commonly cited negative influences were lower commodity prices, cash or credit availability, high input prices, weak cash rental rates, an uncertain agricultural future and strong alternative (stock market, economy).

The Iowa Chapter of the REALTORS Land Institute (RLI) in Ankeny announced similar results of its September 2017 Land Trends and Values Survey, in which participants were asked to estimate the average value of farmland as of Sept. 1, 2017.

Kyle Hansen, an accredited agricultural real estate sales and farm broker for Hertz Farm Management/Real Estate Services in Nevada, Iowa, and RLI’s newly elected vice president, said the survey results show a statewide average increase of cropland values of 2 percent for the March-September 2017 period.

“Combining this increase with the 0.9 percent increase reported in March 2017 indicates a statewide average increase of 2.9 percent from September 1, 2016, to September 1, 2017,” he said. “The survey shows the first full year statewide increase in land values since 2013, indicating some current stability.”