Low interest rates major factor in strong farmland prices: Zhang

March 22, 2021

Wendong Zhang, assistant professor, was interviewed for a March 21 Sioux City Journal story, "PROGRESS: Farmland values rise in every county in Northwest Iowa."

Zhang said that low interest rates -- the Federal Reserve has maintained its interest rates just above zero for most of this year -- were a major factor in the strong prices. This is in part because low interest rates reduce borrowing costs, making it more affordable to purchase land and helping drive up demand. 

The rebound in prices came about because of "surging exports to China and other countries," Zhang said. "Typically, when you are entering this post-harvest season, you typically will see much lower prices, rather than a surge or a rally... So this phenomenon is rather unique and unconventional. But it's really driven by really strong, surging exports to China." 

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