Much of the 2019 crop year has been a long, difficult slog. An abnormally wet (and late) fall harvest in 2018 started things out behind schedule coming into 2019. Then, an abnormally wet spring delayed typical growing-season activities, which backed up the start of harvest 2019 while folks waited for crops to finish and dry down.
As we finished September and started the month of October, it was raining again! Do you sense a trend here? Frustrations aren’t overflowing — yet. But with each washout day, people are becoming more concerned and worn out.
This lead-in might leave most people to conclude that the Iowa farmland market is on wobbly legs. To the contrary. The early fall farmland sales market across Iowa has shown great resilience — and perhaps more strength than some market observers expected. The market is not lock-step consistent in every region, but overall the market is quite stable.
Strong bids for high-quality land
Premium-quality farms are selling best – well-drained, well-cared productive soils, with a high percent of tillable land. In this category, more than a few sales have easily exceeded $10,000 per acre at public auction.
The second and third tier of land quality is where value gaps have been exposed. While prospective buyers are consistently willing to take a risk to buy a premium farm, they are not as willing to do so for a farm with flaws — think waterways or terraces, irregular field shapes, poor drainage, and lower CSR2 ratings. If you are selling a farm, it is important to understand how a farm will fit into its local marketplace.
So, what’s supporting land values during this somewhat crazy year? There are several factors, not the least of which is anticipated average to average-plus crop production totals in 2019. This year’s crop is not going to be a record, but Iowa production is also not going to be as poor as our farming neighbors to the east (Illinois, Indiana, Ohio), south (Missouri), and north and northwest (Minnesota, South Dakota).
In addition to 2019 production, interest rates are meaningfully lower than they were a year ago, which is a supportive factor in our land market.
The timing of the most recent Market Facilitation Program installment is a cash flow shot-in-the-arm at just the right time for many in agriculture. These payments cannot be relied on in the long term, but they are significant when it comes to maintaining stable rents for 2020, among other things.
The 2019 crop year has been tough. To be well-positioned for 2020, we need Mother Nature to give us a break to finish harvest. But given the difficulty Iowa agriculture has weathered this year, our farmland market is showing why it’s often considered the bellwether for all farmland markets.
Pocahontas County. North of Havelock, 164 acres sold at public auction for $7,100 per acre. The farm consists of 147 tillable acres with an 83.1 CSR2, which equals $95 per CSR2 point on the tillable acres.
Floyd County. Located near Greene, 130 acres sold at public auction for $7,625 per acre. The farm has 126 tillable acres with an 85.1 CSR2, which equals $92 per CSR2 point on the tillable acres.
Chickasaw County. Southwest of Nashua, 152 acres sold for $8,627 per acre. With 141 tillable acres and a 90.1 CSR2, it equals $103 per CSR2 point on the tillable acres.
Calhoun County. East of Lake City, 100 acres sold at public auction for $9,600 per acre. The farm consists of 100 tillable acres with an 87 CSR2, which equals $110 per CSR2 point on the tillable acres.
Polk County. South of Madrid, 81 acres recently sold at public auction for $11,500 per acre. The farm has 81 tillable acres with an 88.2 CSR2, which equals $130 per CSR2 point on the tillable acres.
Cedar County. North of Stanwood, 136 acres sold at public auction for $12,300 per acre. The farm consists of 136 tillable acres with a 91.4 CSR2, which equals $135 per CSR2 point on the tillable acres.
Cass County. Southeast of Atlantic, 35 acres sold at public auction for $7,600 per acre. The farm has 34.5 tillable acres with a 76.4 CSR2, which equals $101 per CSR2 point on the tillable acres.
Appanoose County. North of Centerville, 43 acres sold at public auction for $5,300 per acre. With 42.5 tillable acres and a 56.2 CSR2, it equals $95 per CSR2 point on the tillable acres.
Davis County. North of Bloomfield, 65 acres sold for $6,700 per acre at public auction. The farm consists of 61 tillable acres with a 62.3 CSR2, which equals $114 per CSR2 point on the tillable acres. This farm had been operated organically.
Hensley is president of Hertz Real Estate Services, which compiled this list but did not handle all sales.Visit hertz.ag.