U.S. Sen. Tom Harkin
U.S. Sen. Tom Harkin
December 13, 2013

U.S. Sen. Tom Harkin, D-Iowa, a congressional agriculture policy insider for four decades, said Thursday he expects a leveling-off of the recent "huge increases" in the price of land in Iowa.

Average Iowa farmland value is estimated to be $8,716 per acre, an increase of 5.1 percent from 2012, according to results of the Iowa Land Value Survey conducted in November. Values increased in 2013 for the fourth year in a row and achieved historic peaks. From 2011 to 2012, farm land prices skyrocketed 23.7 percent - having gone up32.5 percent and 15.9 percent in the two preceding years.

"When all is said and done, I think all of us have been somewhat alarmed at the huge increase in land prices in Iowa over the last several years," Harkin said." If there's one thing I hear a lot when I travel around Iowa, it's that the price of land is no longer bearing any kind of proportion to what the productivity of that land is and what that land can return."

A majority of the Iowa Land Value Survey respondents were concerned about income. Three-fourths of the respondents cited lower commodity prices as a negative factor affecting the land markets, said Michael Duffy, the Iowa State University economics professor and extension farm management economist who conducts the survey.

Data show the rate of increase in land values slowed and commodity prices started dropping after June 2013.

"I'm afraid it's becoming a little closer to the speculative area rather than as sound, valued investments for what that land can return," Harkin said. "I'd hate to see a bubble develop in this area and have that bubble burst. That would be the worst of all things to have happen."

One positive factor, Harkin said during a conference call with The Daily Times Herald and other media, is that Congress is poised to pass a farm bill in January. The lack of a bill has been cited by many analysts as having a negative impact on land prices and other key farm indicators.

"There is uncertainty out there - that's for sure," Harkin said.

The Iowa Democrat said strong demand for ethanol is a crucial component for favorable land prices.

In rare and forceful solidarity, Iowa's political leadership, both Republican and Democrat, are aggressively combating an EPA proposal last month that would decrease the required use of renewable fuels from 14.4 billion gallons to 13.01 billion gallons.

"If the Renewable Fuel Standard falls, then you're going to see a drop in land prices, corn prices in Iowa," Harkin said. "There's no doubt about that, so that's why we're fighting so hard to keep the Renewable Fuel Standard."