AMES, Iowa—The annual land value survey and cash rent surveys from USDA’s National Agricultural Statistics Service confirm what many in Iowa’s agriculture industry already expected: land values and cash rents are up significantly.According to an article in the September edition of the Ag Decision Maker newsletter, a publication of Iowa State University Extension and Outreach, Iowa cropland values rose 19.7% on average over the past year, from $7,810 per acre to $9,350 per acre. Pastureland is up 9.3%, now averaging $3,300 per acre.As for cash rents, the survey shows an increase of 9.9% for non-irrigated cropland, for an average of $256 per acre in 2022. Cash rent for an acre of Iowa pastureland is up to $59.50 per acre on average, an increase of 2.6% and a new record high level.The article is authored by Lee Schulz, associate professor in economics and livestock economist at Iowa State University. He said it’s important to keep in mind these numbers are statewide averages from USDA, and that county and individual parcel results could be higher or lower, depending on many factors.Schulz said he would not be surprised to see further increases to pastureland, because historically, pasture values tend to follow cattle and corn prices.As a state average, cropland values are the highest ever, and cash rents are second only to 2014, when they reached $260 per acre.The current increases come at a very different time in the economy, however.“The 2022 general economy is more anemic,” according to Schulz. “Inflation is around 8.5%, which could buoy land values. Potential for a steeper economic slowdown could dampen interest in buying land, and rising interest rates and any slippage in net farm income could erode farmers’ ability to service land debt.”While the future is difficult to predict, Schulz said if inflation remains high and interest rates continue to climb, the impact will eventually be felt.“Agriculture does not operate in a vacuum,” he said. “The Federal Reserve is actively raising interest rates and eventually that has a negative correlation with land values and farmers’ ability to borrow.”For farmers and landowners having negotiations over land sales and rent, Schulz said the USDA surveys are useful, but that decisions should include other surveys and factors, as well, such as the annual Iowa State University Land Value Survey, released at the end of each year, and the Iowa State University Cash Rent Survey, released each May.“The USDA survey findings help provide one data point for conversations, but the agricultural community should continue to weigh other sources of information and factors when making decisions about cash rents and sales,” said Schulz.
(contributed press release, ISUANR)
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