Midwest Farmland Prices soared during 2007, according to the Des Moines Register today. According to the appraisers
at Farm Credit Services of America, farmland prices increased 20% or more in three of the four states covered by the organization (Iowa, South Dakota, and Wyoming) during 2007, with the fourth (Nebraska) close behind at 19.6%. Kirk Manker, chief appraiser, credits profitable commodity prices, increasing yields, relatively low interest rates, and ethanol production for the increase in Midwest farmland prices. A secondary factor cited by Mr. Manker is the decreased value of the dollar compared to other currencies, which has the effect of boosting exports of our agricultural products since they therefore are less expensive compared to previous years. The final reason given for the increase in farmland values is investors and recreational buyers purchasing land.
Here are the stats:
Will it continue? Michael Duffy, Iowa State University Extension economist, thinks so. His thoughts: “We have seen a fundamental shift in demand for corn due to ethanol production. I don’t think this demand will diminish in the near future.” Mr. Duffy says he thinks Iowa farmland values will continue to be strong into the next five years at least.
Ken Tharp
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Copyright © 2008 By Ken Tharp, All Rights Reserved. * Midwest Farmland Prices Spike Higher During 2007 * Contact Ken Tharp for information on Section 1031 tax-deferred exchanges anywhere in the United States.
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Ken, Whatever the reasons land will continue to be a good investment. I'm a believer!
Bill Roberts
Bill - I suspected that you might be!
Everybody is a little edgy about prices, will they last, will they tank and everybody is sitting with high priced land and low priced crops? If there was an authority on Iowa Land values its certainly Mike Duffy. He is the Alan Greenspan of Iowa land values. I bet he is right as usual.
Jason - I agree - I'm certainly comfortable deferring to Mike Duffy on land values. Hey, did you hear about the 1031 like-kind provision being removed from the Farm Bill about 30 minutes ago??
Been on the road all day Ken. Just landed in a motel room in central Kansas for the day and other than ActiveRain I've not even gotten to look at the news yet. Probably have an update blog coming from you soon?