Farmland prices explode in Iowa

Tuesday, February 1, 2011

Farmland prices are exploding in Iowa and all because of corn and soybean prices, says DesMoinesRegister.com .

Corn is priced 50 per cent higher than in June. Bids of $8,000 (all figures in U.S. dollars) an acre are common. The average appreciation since end of summer is $1,000 an acre, according to the Iowa Realtors Land Institute, which reported an 8.5 per cent increase from a year before.

The Federal Reserve Bank of Chicago reported a 13 per cent rise in farmland values Oct. 1 for the previous 12 months.

Farmers expecting a 40 cent-a-bushel profit on their corn got $2.50. Bankers say loans are being taken out with 55-60 per cent equity, compared to 10-15 per cent in the 1970s and early '80s.

A worry is that a change in either ethanol policy or in federal crop subsidies could dash future profit prospects. Ethanol plants buy the equivalent of half of Iowa's corn. BF