Over the past couple of years, increased production of alternative fuels, particularly ethanol, has yielded somewhat of a renaissance in rural America.
Last spring, unprecedented demand prompted growers to plant the most corn acres since World War II. Favorable weather conditions, superior hybrids and good old fashioned "hard work" yielded a record 13. 2 billion bushel crop, yet prices still hover around $4.00
Nationally, farmland values increased 13 percent for this year to about $2700 per acre. And nowhere is the boom more evident than in the state that produces the most corn and ethanol -- Iowa.
A survey released by Iowa State University Extension this week shows the increase in land values in the number one corn and biofuels producing state hit an all-time high of $3,900 per acre -- an increase of 22 percent. For Iowa farmers this was the fifth consecutive year of record increases and the highest single-year gain since 1976. A closer look at the data reveals more than half the counties in the Hawkeye state contained land valued between $4000 and $5000 per acre.
ISU Extension economist Mike Duffy, the author of the survey, believes Iowa farmland should hold its value for the next few years.
Mike Duffy, ISU Extension: "My general feeling is that the land market will remain strong for at least the next five years...It's like someone dropped a huge boulder into a pond 12 to 14 months ago and we're still seeing the ripples go out. And we're not sure where they're going to stop."
Even with high prices the sale of land was unaffected. Almost 40 percent of respondents reported an increase in the number of land sales this year, making it the highest amount in nearly two decades. The distribution of those buying has changed as well. Ten years ago 75 percent of the purchases were made by farmers but this year the number had declined to 60 percent with land investors making up the difference.