Prices paid for Iowa and Nebraska cropland, after tripling in the past decade, are still strong but may be leveling off, according to new figures from Farm Credit Services of America.
The number of farmland sales in the two states fell to a 10-year low, the Omaha agricultural lending cooperative said, dropping 42 percent in Iowa and 44 percent in Nebraska from 2012.
Farmers in the region have strong enough finances to weather a moderate decline in land prices, the report said, with capital at “a position of strength” and relatively low debt tied to their recently purchased land.
Per-acre prices last year averaged $6,320 in Nebraska, up only $12 from 2012, and $9,863 in Iowa, up $786 or 8 percent from 2012. The previous year, average sale prices gained 52 percent in Nebraska and 21 percent in Iowa.
Even so, individual sales set some per-acre records, reaching as high as $17,000 in Iowa and, in Nebraska, $8,100 for irrigated land and $5,900 for dry cropland toward the end of 2013.
The figures are from auctions and private sales recorded during the year.
A separate study that tracks the value of 65 individual farms in the region showed their land values down 2.8 percent in Iowa and up 0.7 percent in Nebraska over the past six months.
One reason for the drop-off in the number of sales, said Mark Jensen, senior vice president and chief risk officer for Farm Credit, was a rush of sales in 2012 by land owners who feared that an income tax exemption for capital gains would expire.
Land owners and buyers also were encouraged by strong grain prices and farm profits at the time, he said, and land owners were uncertain about the overall economy and the impact of the federal government's possible “fiscal cliff.”
With more land sold in 2012, he said, that left fewer sellers and buyers for 2013.
For the future, Jensen said, buyer demand for farmland may be adjusting to decreased prices for corn and soybeans and the resulting smaller profit margins.
Even though there were fewer sales in 2013, he said, auctions in the two states “were often well-attended with multiple bidders,” and most purchasers were local farmers.
In Iowa, 6.7 percent of auctions last year resulted in no sales, compared with 3 percent in 2012, Jensen said, because some sellers might have been expecting higher bids.