The land value rise in the recent survey was led by a 4.4 percent increase in central Iowa land prices, which had been down 3.3 percent last year in the survey by the Iowa institute.

"Things tend to even out over a longer period," said Troy Louwagie of Hertz Farm Management, who oversees the twice-yearly farm survey. "Central Iowa saw a drop last year, and then it reversed itself."

The institute's survey tracks a recent poll by the Federal Reserve Bank of Chicago showing a 2 percent rise in values during the last half of 2009 and reverses what had been a small decline in late 2008 through early 2009.



The annual study of Iowa farm values by Iowa State University showed a 2 percent decline in the calendar year through last November. ISU economist Michael Duffy noted at the time that the decline reflected a downturn in the market earlier in the year and that prices appeared to be improving by last fall.

Louwagie said there were fewer land auctions in late 2009 and early this year, the traditional period for the bulk of farm transactions.

Because the average Iowa farmer is 60 years old, the state's agricultural leadership has been on alert for possible large-scale shifts in land ownership over the next decade.

"I think a lot of landowners who might normally be in the market took a look at what other investments are out there and decided that, after they would have to pay the capital gains taxes, that they'd be better off just to keep the land since farming still is profitable," Louwagie said.

He said two crucial input costs for farmers - fertilizer and fuel - cost about half of what they did a year ago. That helps to persuade farmers to keep their land.

"So even if corn prices are down a little from last year, farmers still are looking at a fairly good situation for this year," Louwagie said.

Iowa farmland doubled in value from the end of the 1990s through 2008, primarily on the strength of rising demand for corn because of increased demand from ethanol and greater yields.

Louwagie said farmland agents generally don't believe there is much connection between farmland values and prices for residential urban real estate.

Surveys by Iowa State University show that more than 70 percent of farmland sales in Iowa are to neighboring farmers.

Louwagie said the remaining sales to investors tend to be divided between Iowans and non-Iowans.

All of Iowa's nine districts reported increases, from 4.4 percent in central Iowa to 0.8 percent in northeast Iowa.

http://www.desmoinesregister.com/article/20100324/BUSINESS01/3240346/-1/SPORTS12/State-farmland-prices-rebound-central-Iowa-leads-with-4.4-rise#collapse