Friday, January 18, 2008
Best Land in the World
As the numbers come in for 2007, it looks like land values for farms in Iowa will set a new record. The average acre of farmland in Iowa increased 22% in value over the past year alone ($705) to reach a new average high of $3,908, according to Iowa State University extension economist Michael Duffy. Although it still isn't as high as the price adjusted for inflation from 1979, the increase is substantial. Duffy attributes the 1979 farm price increase to a surge in demand for grains and soybeans from the Soviet Union and points out that a similar phenomenon is occurring today. The increase in demand for ethanol along with a surge in demand from China has made this fertile land all that more desirable. While increased assessed land prices will surely mean higher taxes for the individual farmers along with rent prices, it has caused the net worth of farmers from across the Midwest to increase dramatically. Duffy adds that although areas such as rural Illinois have seen land investors come in, the most recent trend is for local farmers to reinvest this new net worth in more land to expand their operations and keep a majority of the farmland locally owned. Let's keep it that way.
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