Favorable interest rates, a strong demand for land, and substantial government payments helped stabilize Iowa’s farmland market in a year in which Iowa’s farmers faced the destructive onslaught of a derecho, significant uncertainties in US agricultural trade, and a pandemic that significantly altered market demand.
“The land market faced downward pressure initially with the onset of the COVID-19 pandemic, which lowered food demand and resulted in declines in livestock and ethanol prices,” said Dr. Wendong Zhang.
Zhang is an assistant professor of economics at Iowa State University and is responsible for leading the annual Iowa Land Value Survey. This year’s survey found that the average statewide value of an acre of farmland is $7,559, an increase of 1.7%, or $127, since 2019. The $7,559 per acre estimate, and 1.7% increase in value, represents a statewide average of low-, medium-, and high-quality farmland. Statewide, Iowa’s high-quality farmland saw a decline in value of 0.1%. However, Zhang said that it’s important to note that number is more indicative of a flat market, rather than a decline, and that several factors have led to a recent rebound in the market.
“The rebound in recent months is due to strong government payments, interest rate cuts, limited land supply, and recent commodity price rallies,” he said.
In mid-November, both US corn and soybeans prices their highest point so far this year. Despite some decline since then, both prices are still higher than at the beginning of the year, especially soybeans.
“The export surges related to the phase one deal and China’s efforts to rebuild its hog herd ramped up demand for feed grains,” Zhang said. “There is definitely concerns and downside risks about the price rallies because postharvest prices are typically lower.”
However, he stressed that China is still at least 10%–15% short of its regular hog inventory, so farmers should continue seeing increased feed grain demand. Additionally, Germany, a key competitor for US pork exports, is now battling with African swine fever, the same disease that decimated China’s hog industry, which could increase US pork exports in the future. You can see the full report here: