Farm Land Values UP for Some Types of Farmland

June, 2015:

Iowa:

Farm Land Values have been in a tailspin the last year and a half, overall.  But some areas of Iowa and Nebraska have seen stunning increases over the past year!

For instance, preliminary findings from the 2015 U of Nebraska Farm Real Estate Market Survey indicate that "Hayland" in the Northeast sector went up a whopping 40% from Feb. 2014 to Feb. 2015!  Hayland went up 20% Statewide, the East and Southeast were up 23 and 19%, respectively.

Grazing land (non-tillable) went up an average of 12% statewide, with the East area up 26% for the year.  This is land just across the river from Iowa!

Iowa does not have an identical monitoring tool for pastureland, but the ISU Farmland Value Survey released the March, 2015 results recently.  Not surprisingly, the values in "tillable cropland" dropped over the prior six months on the average 7.6% statewide.

Surprisingly, Non-tillable pasture went UP in 7 of 9 reporting regions!

Why?   The answer could be as simple as seeing "what's for dinner."    As we all know, beef prices are significantly higher than normal -- there is high demand for pasture land.  Hogs and Chickens eat corn and soybeans; cattle eat hay, grass, corn stalks and some corn and beans.   The cost of production of grass and hay is significantly lower than the cost of growing corn and beans.  Taking the animals to the feed is what pasture land is all about -- low cost of production = higher profits for farmers.

Farmers are in the business to make money.  When the profit fell out of corn and beans, they are looking to make up for it on cattle.  Cows eat grass, make milk for calves. Calves on the cow can grow to almost half of their market weight. Finishing the calves in feedlots is also a great way to get the most out of corn which has been used for ethanol production.  Its a great combination and pasture land is seeing a high demand as a result!

Don't sell your pasture short!

Mark Alan Newman is an auctioneer and an attorney, born in Clarion, Iowa, he practices at Newman, Thompson, & Gray PLC, in Forest City, Iowa.