DES MOINES, Iowa (AP) — The value of Iowa farmland has jumped again, hitting a record of nearly $8,300 an acre. It was driven higher by record high corn and soybean prices, which rose amid fears that this year's severe drought could cause supply shortages.
The value of Iowa farmland rose 24 percent over the past year, according to the annual land value survey compiled by Iowa State University. It marks the third straight year that farmland value had risen more than 15 percent.
The 2012 ISU survey covered 486 responses from Iowa land brokers.
Iowa State Extension's Mike Duffy, who oversees the survey, said the boom likely will fade over the next five years as corn and soybean prices moderate from the record levels they reached this year.
Duffy said that within two years, farmers in other grain-growing nations including Brazil, Argentina, Russia, and South Africa will respond to high prices. The greater production, absent more drought problems, will lower corn and soybean prices worldwide and cool off the red-hot land values.
"It won't be a crash like we saw in the 1980s but a slow decline," Duffy said. Values dropped by two-thirds between 1981 and 1986.
Duffy said that because farmers are in better cash positions today than three decades ago, he didn't think Iowa farmland values were vulnerable to a steep dive.
"High land prices kept going higher in the 1970s, even when farm profits narrowed," Duffy said. "That won't happen this time."
Higher corn and soybean prices in recent years have meant more cash for farmers, who have bid up land prices and bought new tractors and combines.
While farmland prices have soared more than 60 percent just since 2009 farm input costs have more than doubled since the middle of the last decade.
The high cost of diesel fuel, fertilizer, and seed means farmers must make at least $5 per bushel for corn to break even. They've gotten those prices through the last three harvests. On Tuesday, corn sold for $7.24 per bushel.
Sioux and O'Brien counties in northwest Iowa showed the highest averages, both over $12,000 per acre. The lowest values are along the Iowa/Missouri border, with Decatur, Wayne and Appanoose counties showing averages under $3,500 per acre.