The strength in the Iowa farmland market continues as we approach spring planting 2021. The mid-March release from the Iowa Chapter of Realtors Land Institute reflected an average increase of 7.8% for statewide farmland values. Of course, there are differences across both the various geographic regions, as well as the different land qualities.

One thing is clear: Land values are stronger today than they were six months ago. This is the first Iowa-market-based survey that reflected the strength that, for several months, many brokers and auctioneers had been anecdotally describing. But because many of the surveys are done only annually or biannually, it can take time for the surveys to catch up with the market. This time lag has been especially true for a market that has moved as quickly as the Iowa land market has over the past six months.

The market has come a long way from 12 months ago. A year ago, COVID-19 had just entered the scene, and there was tremendous uncertainty as to how the pandemic might affect various asset classes, including farmland. Since that time, we have seen several key things occur that have impacted agriculture:

Interest rates. Interest rates collapsed in early 2020 with the investment community’s flight to safety, and the commitment from the Federal Reserve to keep rates low into the foreseeable future. Although rates have now started to tick higher again, this low-rate environment has greatly supported farmland values in early 2021.

Export demand. Previously weak export demand for commodity crops greatly accelerated through 2020, with the U.S.-Mexico-Canada Agreement being implemented and the Phase 1 agreement with China yielding results. What were large global surpluses in early 2020 turned to much thinner inventories than anyone could have imagined last summer.

As a result, corn and soybean prices are at their highest levels since 2012-13, and farmers and investors alike are seeing on-farm profit possibilities for 2021 not seen for almost a decade. Combine these factors with a very small number of farms being publicly available for sale, and it is easy to understand why the demand for farms is much stronger than the recent or current supply of farms available for purchase.

There remain questions to be answered about the recent change in administrations, and specifically, how farm and tax policies may change in the coming months. But nothing has changed significantly enough to move the market off its current course. So, for now, I remain generally optimistic about land values in 2021. The recent sales detailed continue to show how strong the optimism is throughout the market.

Northwest

Pocahontas County. Northwest of Fonda, 80 acres recently sold at public auction for $10,150 per acre. The farm consists of 74 tillable acres with a CSR2 of 84.6, which equals $130 per CSR2 point on the tillable acres.

North central

Cerro Gordo County. Near Rockwell, 80 acres recently sold at public auction for $12,000 per acre. The farm consists of 74 tillable acres with a CSR2 of 79.6, which equals $163 per CSR2 point on the tillable acres.

Northeast

Fayette County. East of Sumner, 112 acres recently sold for $9,105 per acre. The farm consists of 106 tillable acres with a CSR2 of 89, which equals $108 per CSR2 point on the tillable acres.

West central

Greene County. Northwest of Jamaica, 80 acres recently sold at a virtual online auction for $11,400 per acre. The farm consists of 77 tillable acres with a CSR2 of 87.8, which equals $135 per CSR2 point on the tillable acres.

Central

Grundy County. Near Wellsburg, 80 acres recently sold at public auction for $13,900 per acre. The farm consists of 75 tillable acres with a CSR2 of 68.7, which equals $216 per CSR2 point on the tillable acres. This farm includes more than $18,000 in annual income from wind turbine payments.

East central

Johnson County. Southeast of Solon, 154 acres recently sold for $7,400 per acre. The mixed-use farm consists of 60 tillable acres with a CSR2 of 63.3, 63 acres in CRP, and the remaining 31 acres in pasture, a pond and a small ranch-style home built around 1900.

Southwest

Adair County. North of Orient, 274 acres recently sold at public auction for $7,000 per acre. The farm consists of 236 tillable acres with a CSR2 of 58.4, which equals $139 per CSR2 point on the tillable acres. Of the 236 tillable acres, 143 acres are being cropped, while 93 acres are enrolled in CRP. This land also has more than $33,000 in annual income from wind turbine payments.

South central

Appanoose County. Northwest of Cincinnati, 126 acres recently sold at a virtual online auction for $3,700 per acre. The farm consists of 111 tillable acres with a CSR2 of 40.2, which equals $104 per CSR2 point on the tillable acres.

Southeast

Louisa County. Northwest of Columbus Junction, 130 acres recently sold at public auction for $7,400 per acre. The farm consists of 121 tillable acres, with a CSR2 of 69.0, which equals $115 per CSR2 point on the tillable acres.

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