Wallaces Farmer

Rising input prices can pressure land prices. So far, this is not lowering Iowa farmland prices.

Doug Hensley

March 26, 2024

3 Min Read
rows of corn
VALUES HOLDING: Input prices to produce a crop have moderated a bit in 2024, but commodity prices have decreased even more. So far, though, Iowa farmland values continue to hold their own. Gil Gullickson

In this column’s series on the five most important factors influencing farmland values, I’ve so far discussed commodity prices and interest rates. For this issue, let’s talk about input prices.

I often think of crop inputs as the ingredients to grow a crop. Whenever we have more ingredients going into the recipe — especially more expensive ones — it can impact the outcome.

In this case, an important outcome each year is profitability. In 2021 and 2022, profitability in U.S. agriculture grew greatly, because commodity prices moved higher relative to input prices for producing the crop.

In 2023, however, the pendulum swung back. Input suppliers captured a larger portion of the available margin with record or near-record costs for seed, fertilizer, fuel and equipment.

For 2024, input prices have moderated a bit, especially for fertilizer. However, commodity prices have dropped even more than input costs. This is setting up the smallest profit margin forecast in several years — and the real possibility of no profit margin for some producers this year.

Should relatively high input prices and relatively low commodity prices continue, it will eventually pressure current land values.

For the next two columns, I’ll discuss land sale volume and then local historical wealth as factors affecting land values. Reviewing recent sales from across Iowa still reflects long-term thinking and adequate cash to power sales, as land prices are still holding their own.

Related:How interest rates impact farmland values

Land values map

Dickinson County. North of Terril, ±160 acres recently sold at public auction for $14,600 per acre. The farm consisted of ±157 tillable acres with a CSR2 (Corn Suitability Rating 2) of 87.7, and equaled $169 per CSR2 point on the tillable acres.

Butler County. Near Aredale, ±112 acres recently sold at public auction for $9,100 per acre. The farm consisted of ±77 tillable acres with a CSR2 of 79.9, and equaled $165 per CSR2 point on the tillable acres.

Buchanan County. Southwest of Independence, ±80 acres recently sold at public auction for $14,250 per acre. The farm consisted of 76 tillable acres with a CSR2 of 86.9, and equaled $172 per CSR2 point on the tillable acres.

Woodbury County. Southeast of Correctionville, ±155 acres recently sold at public auction for $11,000 per acre. The farm consisted of ±143 acres enrolled in the Conservation Reserve Program with a CSR2 of 67.9, and equaled $175 per CSR2 point on the CRP acres. Also, three years remain on the CRP contract, which pays about $314 per acre.

Dallas County. Southwest of Perry, ±80 acres recently sold at public auction for $17,400 per acre. The farm consisted of ±79 tillable acres with a CSR2 of 88.7, and equaled $198 per CSR2 point on the tillable acres.

Related:Why commodity prices mainly drive farmland values

Linn County. West of Cedar Rapids, ±234 acres recently sold for $18,250 per acre. The farm consisted of ±224 tillable acres with a CSR2 of 88.6, and equaled $215 per CSR2 point on the tillable acres.

Fremont County. Located near Sidney, ±125 acres recently sold at public auction for $8,250 per acre. The farm consisted of ±105 tillable acres, with a CSR2 of 74.4, and equaled $132 per CSR2 point on the tillable acres.

Ringgold County. Northeast of Clearfield, ±78 acres recently sold at public auction for $6,500 per acre. The farm consisted of ±69 tillable acres with a CSR2 of 51.8, and equaled $141 per CSR2 point on the tillable acres.

Henry County. North of Mount Pleasant, ±120 acres recently sold for $12,575 per acre. The farm consisted of ±118 tillable acres with a CSR2 of 81.7, and equaled $156 per CSR2 point on the tillable acres.

Hensley is president of Hertz Real Estate Services, which compiled this list but did not handle all sales. Call Hertz at 515-382-1500 or 800-593-5263, or visit hertz.ag

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About the Author(s)

Doug Hensley

Hertz Real Estate Services

Hensley is president of Hertz Real Estate Services. The Hertz Farm Management Co. was started in 1946, and now provides a full spectrum of services that includes professional farm management, real estate sales, auctions, acquisitions and farm appraisals.

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