DES MOINES, Iowa (AP) — The average
value of Iowa farmland declined 6 percent over the past year, and
this is the first time those values have dropped for three years in a
row since the 1980s farm crisis.
The Des Moines Register reports that
Iowa State University estimates that Iowa farmland is now worth about
$7,183 per acre on average. That's 17.5 percent lower than the record
set in 2013 of $8,716 per acre when crop prices were higher.
But assistant Iowa State University
economics professor Wendong Zhang says the state is unlikely to see
another crisis soon because farmers are generally in better financial
Most Iowa farmers increased their
financial reserves during the boom that preceded the current drop in
crop prices. And Zhang said government safety nets are better than
they were in the 1980s and interest rates remain low.
Plus, the overall debt level for
farmers remains lower.
"For a pessimist, there are
reasons to worry, especially for landowners . or producers who are
over-leveraged," Zhang said. "For an optimist, this decline
is still modest, and the probability of a replay of the 1980s farm
crisis is low."
Even though a crisis doesn't seem
likely there are still farmers having a hard time today, said Bill
Northey, Iowa's Agriculture Secretary.
"There are some producers that are
really struggling," Northey said. "I imagine there will be
farmers farming less ground next year . and maybe some that won't be
able to farm."
Nationwide, farm income is projected to
be $66.9 billion this year. That's 46 percent lower than the record
set in 2013. That means the average household income for the nation's
roughly 2 million family farms will be $118,890.
Corn prices have fallen nearly 60
percent in the last several years, and soybean prices have fallen
roughly 40 percent. At the same time, many key costs have increased
for farmers, including seed, herbicide and farmland rents.
Zhang said livestock producers have
also been struggling.
"While corn and soybean prices
continue to fall short of production costs, livestock producers faced
a tougher environment in 2016 with hog, cattle and dairy prices all
down by at least 30 percent compared to two years ago," he said.
Iowa farmland prices haven't dropped as
much as incomes because there is still strong demand for the limited
supply of land. But Zhang said farmland values might continue to
decline for another year or two if crop prices remain weak.