AMES, Iowa -- Farmland values in the northwest corner of Iowa remain among the highest in the state, despite moderate declines in some other area counties, according to a 2018 survey.
Average values in 10 Northwest Iowa counties dropped slightly in the last year, while prices rose in four, Lyon, Osceola, O'Brien and Dickinson, which each saw increases of roughly 0.6 percent.
Iowa State University assistant economics professor Wendong Zhang, who conducted the 2018 Farmland Value Survey for ISU Extension and Outreach, cautioned against reading too much into the higher values.
"If you take the inflation out -- inflation over the last year rose more than 2 percent -- the land prices in the northwest corner only rose less than 1 percent, so even for those counties, the land prices with inflation adjustment would show a modest decline," Zhang said.
Across the state, farmland rose modestly in 28 of the 99 counties, while they fell in 71 counties. The statewide average value fell by 0.8 percent to $7,264 per acre.
The statewide declines aren't too severe, Zhang cautioned.
"I don't think it's a major drop, it's a modest decline, mainly driven by commodity price declines due to significant supply, abundant supply. Over the past few years, we've seen bumper crops after bumper crops," he said.
An acre of O'Brien County farmland now averages $10,413, compared to $10,354 per acre in the 2017 survey. O'Brien County land is now the second-most expensive in Iowa, just behind eastern Iowa's Scott County, where the average price per acre stands at $10,537.
The average value for Sioux County, which borders O'Brien County, is the third highest at $10,200, a $2 per acre decline from last year's survey.
High prices in the two counties, which historically have had some of the most fertile soil, reflects "strong competition for top-quality ground," Zhang said.
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In four other area counties -- Buena Vista, Lyon, Plymouth and Osceola -- this year's values exceed $9,000.
On the other end of the scale, neighboring Monona and Woodbury counties has the region's lowest average farmland, at an estimated $6,416 and $6,646 per acre, respectively. Values in each county fell by roughly 1.5 percent.
Zhang said price differences between counties in the same part of the state can be explained by different demand leveles and the Corn Suitability Rating 2. The latter is an important metric in making land purchases that approximates the productivity of crop land. The CSR-2 is lower in Woodbury and Monona counties than in Sioux or Lyon.
This year, prices in central Iowa slumped more than anywhere else, with many of those counties losing 2 to 3 percent of their per-acre price from the 2017 survey. Zhang said that area is dependent on row crop values, leaving them vulnerable to price declines, while Northwest Iowa is home to more livestock operations.
Iowa farmland values have declined over the past five years. Reasons for the price slump include lower commodity prices, rising interest rates and "to some extent" trade disruptions, according to the survey. The survey also notes that things could be worse, given the degree to which higher interest rates and lower crop prices put pressure on farmers' bottom lines.
"Considering the rising interest rates and declining commodity prices, the farmland market is holding up fairly remarkably, and overall, the land market across the state is relatively stable," the report says.
Despite the price decline, Iowa's current $7,264 price per acre is still eight percent higher than in 2011, and 63 percent higher than values a decade ago.
Prices are 17 percent off their historic 2013 peak, when historically low interest rates, strong export demand and higher corn demand due to ethanol drove per-acre prices to an average of $8,716 in Iowa.
Zhang said he personally expects little change or a modest decline in farmland prices next year.
"In general, people see somewhat mixed results a year from now," Zhang said. "Five year from now, people are more bullish. The vast majority would think that the land market will continue to see some increase compared to current levels."