“All signs in general are still signaling a stabilizing market,” said Wengdong Zhang, an assistant professor of economics at Iowa State University who is in charge of the survey.
The survey, conducted by Iowa State University and the Center for Agricultural and Rural Development (CARD), has been conducted annually since 1941.
Zhang said the increase, only the second upward move in the past six years, is a good thing. But he cautions that it should not be labeled as a solid rebound of the market or a sign of a significantly stronger agricultural economy.
Instead, he said, the increase appears to be driven by low interest rates, strong crop yields in Iowa, a limited supply of land going on the market, the government’s Market Facilitation Program payments which offset price drops due to the trade war with China, and investor demand from outside agriculture.
A new Iowa State University survey reveals farmland values in the state rose 2.3 percent over the past year, despite the trade disputes and declining income. Low interest rates, strong yields and a limited amount of available land helped boost the statewide average to $7,432 an acre, said Wendong Zhang, an Iowa State assistant economics professor.
“This recent modest increase in land values reflects a lower interest rate environment and slowly improving U.S. farm income. However, we are still faced with significant uncertainty, especially the ongoing U.S.-China trade war, which has significantly affected agricultural exports, especially soybean exports, and lead to lower commodity prices and weaker farm income,” Zhang said. “Stronger-than-expected crop yields in Iowa and continuing limited land supply helped contribute to the increase in land values, despite low commodity prices.”
This story also covered in Albia Newspapers, Jan. 3