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Iowa Farmland

Iowa Farmland. Realtors Land Institute December 6, 2004 Michael Duffy. Outline. Background Land Values Rate of Return Expectations Land Ownership Trends and Implications Land Rents and Rental Arrangements Costs of Production Are we set up for another fall?. Iowa Farmland.

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Iowa Farmland

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  1. Iowa Farmland Realtors Land Institute December 6, 2004 Michael Duffy

  2. Outline • Background • Land Values • Rate of Return • Expectations • Land Ownership Trends and Implications • Land Rents and Rental Arrangements • Costs of Production • Are we set up for another fall?

  3. Iowa Farmland • 68 percent of land is harvested • 62 percent of the land is in corn or soybeans • 68 percent of the land in farms is in corn or soybeans • Iowa farmland valued at approximately $73B • 91 percent of land is in farms

  4. Lyon Osceola Dickinson Emmet Winnebago Worth Mitchell Howard 87% 91% 88% 90% 92% 90% 88% 79% Winneshiek Allamakee 58% 35% Kossuth 94% Sioux OBrien Clay Palo Alto Hancock Cerro Gordo Floyd Chickasaw 89% 91% 88% 92% 95% 92% 88% 83% Fayette Clayton 77% 53% Humboldt Bremer Plymouth Cherokee Buena Vista Pocahontas Wright Franklin Butler 95% 87% 83% 82% 92% 95% 95% 92% 87% Dubuque Black Hawk Buchanan Delaware Webster 49% 91% 88% 76% Woodbury Ida Sac Calhoun Hamilton Hardin Grundy 93% 77% 86% 92% 94% 93% 89% 93% Jackson 39% Jones Tama Benton Linn 71% Monona Crawford Carroll Greene Boone Story Marshall 79% 83% 76% 82% 82% 87% 90% 88% 89% 86% Clinton 82% Cedar 83% Harrison Jasper Poweshiek Iowa Shelby Audubon Guthrie Dallas Polk Johnson 82% 87% 79% 68% 84% 78% 70% 65% Scott 84% 70% 89% Muscatine 79% Warren Keokuk Washington Pottawattamie Cass Adair Madison Marion Mahaska 84% 46% 49% 59% 72% 63% 72% 74% 60% Louisa 78% Mills Montgomery Adams Clarke Lucas Monroe Wapello Jefferson Union Henry 87% 54% 58% 74% 53% 40% 25% 22% 26% 70% Des Moines 20% - 40% 81% Van Buren Davis Fremont Page Wayne Appanoose Taylor Ringgold Decatur 40% - 60% 42% 86% 23% 33% Lee 68% 49% 29% 24% 37% 60% - 80% 65% 80% - 100% Percent of Farmland* in Corn, Soybeans *Does not include land in building sites or woodlands.

  5. Lyon Osceola Dickinson Emmet Winnebago Worth Mitchell Howard 0.9% 4.2% 3.3% 2.2% 4.8% 4.4% 3.7% 7.7% Winneshiek Allamakee 9.5% 12.3% Kossuth 1.9% Sioux OBrien Clay Palo Alto Hancock Cerro Gordo Floyd Chickasaw 2.1% 1.8% 3.1% 3.7% 2.4% 2.8% 5.0% 4.4% Fayette Clayton 5.7% 13.5% Humboldt Bremer Plymouth Cherokee Buena Vista Pocahontas Wright Franklin Butler 2.0% 4.1% 3.3% 1.5% 2.0% 1.9% 2.5% 2.4% 4.6% Dubuque Black Hawk Buchanan Delaware Webster 9.1% 3.1% 2.4% 5.2% Woodbury Ida Sac Calhoun Hamilton Hardin Grundy 3.2% 6.9% 3.9% 1.7% 2.1% 3.3% 2.6% 2.5% Jackson 14.0% Jones Tama Benton Linn 6.2% Monona Crawford Carroll Greene Boone Story Marshall 5.9% 4.6% 5.6% 3.8% 3.4% 2.9% 2.5% 3.1% 4.5% 4.4% Clinton 6.1% Cedar 4.4% Harrison Iowa Shelby Audubon Guthrie Dallas Jasper Poweshiek Polk Johnson 4.0% 3.4% 7.9% 7.7% 3.3% 5.2% 8.5% 12.6% Scott 3.9% 8.3% 2.5% Muscatine 7.0% Pottawattamie Madison Warren Marion Mahaska Keokuk Washington Cass Adair 11.1% 11.0% 14.5% 11.7% 4.1% 6.3% 8.1% 7.9% 11.4% Louisa 9.0% Jefferson Mills Montgomery Adams Union Clarke Lucas Monroe Wapello Henry 3.6% 7.1% 10.6% 13.3% 15.4% 10.6% 12.3% 14.4% 10.3% 10.2% Des Moines 4.9% Van Buren Fremont Appanoose Davis Page Taylor Ringgold Decatur Wayne 1% - 4% 13.4% 13.7% 4.5% 7.6% 15.2% 13.4% 17.3% 14.8% 13.8% Lee 4% - 8% 8.4% 8% - 11% 11% - 18% Percent of Farmland* Idled, in Cover Crops, Unharvested, Failed, or Abandoned *Does not include land in building sites or woodlands.

  6. Lyon Osceola Dickinson Emmet Winnebago Worth Mitchell Howard 4.3% 2.5% 3.1% 1.6% 1.5% 2.2% Winneshiek Allamakee 3.6% 6.4% 16.6% 18.3% Kossuth 1.5% Sioux OBrien Clay Palo Alto Hancock Cerro Gordo Floyd Chickasaw 3.7% 2.3% 2.7% 1.4% 1.4% 1.6% 3.1% 5.5% Fayette Clayton 7.9% 15.0% Humboldt Bremer Plymouth Cherokee Buena Vista Pocahontas Wright Franklin Butler 0.9% 4.8% 3.7% 3.3% 1.4% 1.0% 0.7% 1.9% 3.0% Dubuque Buchanan Delaware Black Hawk Webster 20.7% 2.7% 4.0% 9.6% Woodbury Ida Sac Calhoun Hamilton Hardin Grundy 1.1% 3.9% 3.5% 2.6% 1.0% 1.0% 1.9% 1.2% Jackson 14.8% Jones Tama Benton Linn 7.7% Monona Crawford Boone Carroll Greene Story Marshall 4.9% 4.2% 6.2% 2.8% 4.3% 3.4% 2.3% 2.9% 2.1% 2.7% Clinton 4.8% Cedar 3.9% Iowa Harrison Shelby Audubon Guthrie Dallas Jasper Poweshiek Polk Johnson 2.8% 3.6% 4.7% 5.8% 3.1% 5.3% 8.1% 6.6% Scott 4.5% 10.0% 3.4% Muscatine 4.8% Warren Keokuk Washington Pottawattamie Cass Adair Madison Marion Mahaska 3.6% 11.0% 11.0% 8.5% 4.6% 5.2% 5.3% 6.1% 10.1% Louisa 3.9% Mills Montgomery Adams Union Clarke Lucas Monroe Wapello Jefferson Henry 2.9% 4.9% 18.0% 16.5% 10.5% 9.8% 8.0% 13.7% 16.7% 5.6% Des Moines 3.3% 1% - 4% Van Buren Davis Fremont Page Decatur Wayne Appanoose Taylor Ringgold 17.7% 14.2% 4% - 9% 2.0% 6.1% 15.1% 20.4% Lee 8.4% 15.9% 15.1% 7.8% 10% - 12% 14% - 21% Percent of Farmland* in Hay and Oats *Does not include land in building sites or woodlands.

  7. Lyon Osceola Dickinson Emmet Winnebago Worth Mitchell Howard 8.2% 1.9% 5.1% 5.9% 1.7% 3.0% Winneshiek Allamakee 4.7% 7.0% 16.1% 34.8% Kossuth 2.7% Sioux OBrien Clay Palo Alto Hancock Cerro Gordo Floyd Chickasaw 5.2% 5.3% 6.0% 2.9% 1.6% 3.3% 3.7% 6.9% Fayette Clayton 9.0% 18.5% Humboldt Bremer Plymouth Cherokee Buena Vista Pocahontas Wright Franklin Butler 2.3% 4.0% 10.1% 13.3% 4.0% 2.4% 1.9% 3.4% 5.1% Dubuque Buchanan Delaware Black Hawk Webster 21.1% 3.4% 5.3% 9.6% Woodbury Ida Sac Calhoun Hamilton Hardin Grundy 3.2% 12.8% 6.8% 3.9% 3.2% 2.4% 6.2% 3.1% Jackson 32.0% Jones Tama Benton Linn 15.2% Monona Crawford Boone Carroll Greene Story Marshall 10.0% 7.7% 11.8% 11.9% 10.2% 6.3% 5.3% 6.5% 4.7% 7.1% Clinton 7.6% Cedar 8.9% Iowa Harrison Shelby Audubon Guthrie Dallas Jasper Poweshiek Polk Johnson 11.5% 6.4% 8.0% 18.7% 9.5% 11.3% 12.9% 16.0% Scott 7.2% 12.0% 5.0% Muscatine 9.3% Warren Keokuk Washington Pottawattamie Cass Adair Madison Marion Mahaska 8.8% 35.0% 28.5% 21.0% 12.1% 17.5% 10.5% 13.8% 21.7% Louisa 8.7% Mills Montgomery Adams Union Clarke Lucas Monroe Wapello Jefferson Henry 6.3% 13.5% 44.1% 46.7% 23.2% 18.3% 28.5% 35.6% 45.4% 13.9% Des Moines 11.2% 2% - 5% Van Buren Davis Fremont Page Decatur Wayne Appanoose Taylor Ringgold 5% - 15% 36.1% 30.4% 8.0% 18.7% 32.8% 43.6% 25.0% 40.9% 46.9% Lee 18.9% 15% - 30% 30% - 47% Percent of Farmland* in Pasture** *Does not include land in building sites or woodlands. **Includes both woodland and rangeland pasture.

  8. Percent of Farmland in Woodlands, Houses, Ponds, Roads, and Wasteland Lyon Osceola Dickinson Emmet Winnebago Worth Mitchell Howard 5.4% 4.1% 3.9% 3.8% 5.6% 5.1% Winneshiek Allamakee 6.2% 8.6% 14.4% 30.2% Kossuth 4.1% Sioux OBrien Clay Palo Alto Hancock Cerro Gordo Floyd Chickasaw 4.6% 4.8% 5.1% 4.3% 3.5% 4.2% 6.0% 7.3% Fayette Clayton 10.0% 22.0% Humboldt Bremer Plymouth Cherokee Buena Vista Pocahontas Wright Franklin Butler 5.3% 7.3% 5.2% 5.7% 5.2% 4.4% 4.4% 5.3% 7.0% Dubuque Delaware Black Hawk Buchanan Webster 15.2% 6.5% 6.2% 10.0% Woodbury Ida Sac Calhoun Hamilton Hardin Grundy 5.9% 7.3% 5.8% 6.0% 4.4% 4.9% 5.4% 3.7% Jackson 18.5% Jones Tama Benton Linn 11.3% Monona Crawford Carroll Greene Boone Story Marshall 7.0% 6.8% 11.0% 9.1% 7.0% 6.3% 6.2% 8.5% 5.6% 6.3% Clinton 7.5% Cedar 8.3% Harrison Shelby Audubon Guthrie Dallas Jasper Poweshiek Iowa Polk Johnson 8.6% 5.0% 7.2% 9.5% 7.7% 7.6% 9.1% 12.4% Scott 6.8% 10.0% 5.5% Muscatine 10.9% Washington Pottawattamie Cass Madison Warren Marion Mahaska Keokuk Adair 14.5% 13.8% 12.4% 10.2% 11.9% 11.0% 6.7% 6.0% 8.6% Louisa 12.3% Mills Montgomery Adams Clarke Lucas Monroe Wapello Jefferson Union Henry 8.8% 16.2% 16.8% 7.6% 9.1% 11.0% 14.6% 21.0% 19.1% 15.2% Des Moines 12.0% Van Buren Davis Fremont Page Wayne Appanoose Taylor Ringgold Decatur Lee 20.7% 9.1% 16.6% 16.3% 9.6% 11.5% 12.1% 16.0% 10.9% 18.2% 3.5% - 6.0% 6.0% - 10.0% 10.0% - 15.0% 15.0% - 31.0%

  9. Rate of Return

  10. Capitalization Rate • 2002 land taxes • $10 land management fee • ISU Extension Estimated Costs of Production, Land Values, and Cash Rents • Government payment data from Environmental Working Group

  11. Land Compared to Dow Jones • Yearly Dow Jones Industrial dividend reported by Dow Jones • USDA/Economic Research Service rent values • ISU Extension land values • Assume $1,000 invested with returns reinvested • Land tax is only ownership cost assumed

  12. Land Expectations • ISU survey released Dec. 14, 2004 • Federal Reserve estimation; • 2% increase 3rd Quarter; 12% increase July to July • USDA/ERS estimate; • $2,200 per acre; 9.5% increase Jan. to Jan. • Chapter estimate; • 14.4% increase September to September

  13. Land Ownership Trends • Telephone survey conducted by ISU Statistical Laboratory • Data as of July 1 , 2002 • 633 useable responses, 80% response

  14. Land Rents and Rental Arrangements

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