Though they are still growing, an index for farmland values has hit its lowest level since January 2010, according to a Creighton University survey.
The October reading hit 50.9, which was also down from last month’s 54.0 tick.
Crop acreage had been on a hot streak for much of 2012.
Now it appears to be doing so. Creighton:
“Weaker agriculture commodity prices and poor weather conditions in some parts of the region lowered the farmland price index. Clearly, farmland price growth and cash rent expansions in the months ahead will not be as healthy as has been experienced in the past couple of years,” said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University.
Bankers surveyed by the university now forecast cash rents will grow by 2.5% over the next 12 months, compared with a forecast of 9.3% from six months ago.
Iowa Farmer Today reported last month that cash raised when values were soaring is providing some cushion to landowners:
“… Most real estate agents don’t foresee a crash in farmland values even if commodity prices dip lower.
“[An Iowa Chapter 2 REALTORS Land Institute rep] says he doesn’t see a land bubble popping. Instead, he likens the situation to a slow deflation of a balloon.”
But values could see further damage from a change in the government’s biofuels mandate.