Expert: Iowa farmland prices becoming too high to make a profit

SIOUX CITY (KTIV) - A new survey released by Iowa State University reveals farmland values have continued to skyrocket. A 17% growth from 2021 to 2022.

Some of the highest-value land is in northwest Iowa, and experts say it’s so high the owner will never be able to turn a profit. Gary Wright, a farm management specialist, says parcels of land in Sioux and O’Brien counties have sold for upwards of $30,000 an acre in the last year. At that price, Wright believes the land cannot be profitable.

“There’s no way as I’m working interacting with a lot of people on margins, there’s no way that even as good as what these what the prices, market prices are right now, there’s just no way it will pencil out with those kinds of numbers,” said Wright.

So if the land isn’t profitable, then why are folks still buying? Well, experts say there could be a few reasons including sentimental value and wanting to pass that land down to their families. Or it could be because there’s such a scarcity of available land that folks may feel they need to buy now, or they’ll never get the chance.

“You think that you will never get this chance so that that change your calculus, but from a purely investment perspective, you might want to buy southern Minnesota land, as opposed to you know, northwest Iowa,” said Wendong Zhang, an economist from Cornell University.

The survey also found 81% of farmland in Iowa is fully paid for, making the conditions difficult for new farmers to get started. The average price of farmland across Iowa is just over $11,000, while the average price in Northwest Iowa is almost $4,000 more.

Some experts say the increase in land value is expected to continue in the short term, but many feel the land values are either too high or way too high leading to fears a bubble may burst in the future.

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