High quality farmland holds its value better than average farmland. A survey from the Iowa Farm and Land Chapter of the Realtors Land Institute concluded that from September of 2008 to March of 2009, average farmland in Iowa fell over 7%, followed by a fall of 1.9% from March to August this year. Year-over-year average Iowa farmland values fell 9.5%, according to the survey.

The Chicago Fed does a quarterly survey of community bankers, and in the second quarter of 2009, average Iowa farmland values dipped 3% after a 7% drop in the first quarter. The fed blames this drop in value on lower commodity and livestock prices.

These value drops are not characteristic of Iowa farmland. From 2001 to 2007, average Iowa farmland increased in value 20% per year; doubling from $1900 an acre to $3900 an acre.

Even though land values are dropping, good land is holding its value. Good quality land has actually increased in value this year in Iowa, according to the Realtors Land Institute. For the past two years, high quality land cannot be bought for under $5,000 an acre in Iowa. Still, at $5,000 an acre values are not as high, when considering inflation, as they were in 1979 when good land was $5,734 an acre in 2008 dollars.

Future

It is no surprise that superior land will retain its value better than lower quality land in times of dropping land values. Farmland has only declined three times in the past 100 years; during the Great Depression, the 1980s, and now in the end of ’08 and into the beginning of ’09. While values are down on an asset that rarely looses value, it is the opportune time to invest.

Take it from prominent investor, Jim Rogers as he explained the opportunities in farmland best, “I'm convinced that farmland is going to be one of the best investments of our time.”

-Colvin