By Jessica Hopper
Rock Center
It’s the home stretch of campaigning for Republican presidential candidates ahead of the caucuses in Iowa. On Tuesday night, they’ll fold up their tried-and-true stump speeches about the state of the economy – high unemployment and faltering property values; even though in Iowa, unemployment is (well) below the national average and farms are selling for millions of dollars.
In Iowa, farmland is king with prices per acre soaring more than 30 percent in the last year, sending everyone from local farmers to out-of-towners clamoring to buy land. Demand for farmland has created a real estate boom not only in Iowa but across the Midwest.
Farmland values are 25 percent higher than a year ago across Midwestern states like Illinois and Indiana, according to the Federal Reserve of Chicago.
“They’re not coming out here to tell us how to fix our economy,” said Dan Piller of the presidential contenders vying for caucus votes in Iowa.
Piller is a reporter for The Des Moines Register and covers agriculture and bio-fuels. He’s watched rising corn prices in the state translate into booming land prices.
“The price of corn has about tripled in the last five years. The price of corn essentially sets the price of farming. Agriculture is throwing off about twice as much cash as it did just four years ago,” Piller told Rock Center correspondent Harry Smith.
That means farmland is more valuable than ever. Realtor Jason Smith has lived in Iowa his entire life and has never seen land prices as high as they are right now.
“You got a 32 percent increase in the price of land over the last 12 months. That’s historic,” said Smith.
Smith owns a company called Dreamdirt. Standing in the midst of a 9-acre field, Smith estimated the field was worth $45,000.
“I sell farmland, real estate, stuff that people dream about. I’ve always said, I think everybody’s got a little bit of farmer in them,” Smith said.
People are visiting Iowa from around the country, hoping to buy into the farm life.
“There isn’t a kind of person that I haven’t heard from somewhere, whether it’s the farmers from North Dakota, whether it’s a police officer from New York, bankers in Chicago and attorneys from the south. People, and especially business owners that have cash to park, are bringing it up here to Iowa, bringing it up to the Midwest,” Smith said.
New Yorker Patrick Goetz is among those hoping to buy land.
“This is God’s country out here. This is just something I would just enjoy to retire out here, live the rest of my life. I would love to get into farming,” said Goetz, a police officer.
Goetz said that he previously invested in the stock market, but feels land is a more stable investment.
“You get some income off of this. You have income generated every day by renting the tillable ground out. It’s a great investment,” Goetz said.
Long-time farmers are buying their neighbors’ farms, land that they thought would never be for sale.
“We buy land as fast as we can afford it,” Jay Mennenga said.
Brothers Marlyn and Jay Mennenga recently purchased 76 acres, bringing the total acres they farm to 5000 acres. A good portion of the new land was paid for in cash.
“You got to push a pencil before you spend the money. You got to know how you’re going to pay for it and it’s basically, farming’s a business like any other business,” Jay Mennenga said. “You got to have a game plan.”
Auctioneers are selling an acre of land for as much as $20,000, said auctioneer Jeffrey Obrecht. Obrecht has been an auctioneer for over 20 years and says the prices today make a “once in a lifetime deal.”
“Last year, I did about, little over 5,000 acres for about $24 million,” Obrecht said.
Life on the farm wasn’t always so good. Tim Meyer, a fourth-generation farmer, has grown up seeing the highs and lows of land prices.
Meyer’s father once lost two farms during the 1980s when interest rates soared and land prices dropped.
“When I went to school, when I was 5 years old, there were 44 full-time farmers, that’s all they did,” said the 35-year-old Meyer. “When I graduated, there were four full-time farmers left.”
While Meyer also works as a realtor, helping others sell their farms, he’s not willing to sell his own land.
“I think the mentality is that the farmer has become wealthy overnight,” Meyer said. “Are those farmers really going to sell that ground? You know, I don’t think any farmer, especially any of my ancestors, really did it because of the pure fact to make money. It’s a way of life. It’s a way to raise a family. It’s somewhat of a legacy. It’s much more important to me to pass on my family farm to the next generation than it would ever be to sell it.”
Meyers said that farm heirs that have no interest in farming are often the ones selling the lucrative dirt.
“Most of the farms that we’re seeing sold are estates and basically, what I’ve seen more than anything is the farms that are being sold, the heirs don’t have any farming interest. So, they’re taking them to auction or selling them privately or whatever means they chose there,” Meyer said.
The worry for some is that the high land prices are part of a bubble that will soon burst.
“I don’t have a crystal ball,” Meyer said.
“We’re in times that we’ve never been in before, number one. So are we in a bubble…I don’t know,” he said.
Piller of The Des Moines Register said that the farmers who are buying up their neighbor’s land usually have to put 40 to 50 percent down on a farm loan.
“So these are not sub-prime loans that they’re making out here. This is not like the same thing. Farmers have the cash to do it,” Piller said.
Piller said that small community banks that traditionally lend to farmers are reporting soft loan demand.
“So the bankers say that if you have, if it’s a bubble, it probably won’t be on the lending side,” Piller said. “It may very well be, would be, on the manufacturing side because Iowa is one of the few states to show an increase in manufacturing jobs.”
Still, Piller says people are buying with urgency.
“Farmland doesn’t come on the market that often. It’s not like urban real estate where you see signs in the neighborhoods all the time. A good piece of farmland may only come, become available once every 50 years,” Piller said.
Editor’s Note: Harry Smith’s full report, ‘Field$ of Dream$,’ airs Monday, January 2 at 10 pm/9c on Rock Center with Brian Williams.
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take the subsidies , pay more for milk and bread . the choice is yours
Iowa ... home of, Johnny Carson, Bob Feller, Herbert Hoover, Fred Maytag, Carrie Catt, John Wayne, George Gallup, Henry Wallace, Nathan Pusey, etc. And a beautiful state besides.
and SLIPKNOT.
Thanks to the tax payers ethanal is doing well and farmers are getting wealthy. When the crops fail the tax payers will be asked for even more money.
why would taxpayors pay for my crop failure ??? that is why i buy insurance .
elmo: or is it Dumbo? Are you better off than you were 3 years and 2 months ago? Have you been lied to? How is that hope and changie thingie working for you. Only change is the change you have in your pocket. To bad you owe it all and all you are going to have anytime soon. You want some more of this?
i been thinking about opening a outfitting unit . save about twenty acres corn to fatten the deer down by the crick . couple deer blinds advertise on the internet and operate two business on the same land .
With 7 billion people on earth and growing one would expect farmland to be valuable.
i live in Nebraska which is located right over the worlds largest aquafer i'm not selling my land . it goes to my children , just like my family for generations before me this land is just going to get more valuable .
I miss Sarah Pallin and her retarted kids. Toss her into the mix and now you really got a circus, The republican party of "NO HOPE" .......................... Oboma 2012
I have 185 acres in rural Mn, and the Vikings can put their stadium on my land but i want ALOT more than 6000 an acre. I would still take alot less than the greedy bastards that have a spot in the city.
Iowa, a backward corporate farming state that is in a "land grab" ballooning bubble that is about to burst. I just hope not one dime of public money is being used to underwrite SPECULATORS looking to get rich by buying farm land and leasing it out for corn ethanol production. Some high up people know that ethanol subsidies will not be restricted, WHY? THIS WILL DO NOTHING EXCEPT DRIVE THE PRICE OF COMMODITIES HIGHER, WITH NO REAL CAUSE AND EFFECT EXCEPT SOME WILL GET RICH BECAUSE THEY WERE ON THE INSIDER LIST. I laugh to myself when I see that about 15% of Iowans will "have the opportunity" to dictate WHO the rest of the nation will have to decide who will oppose President Obama. I for one believe NOBODY they chose will have even a small chance to defeat Obama, because THERE ARE NO REPUBLICRAP "LEADERS" WORTH A PLUGGED NICKLE. Lier's, cheats, disgraced former congressmen, present ideological idiots, isolationists, plain old racists, that is the republicrap presidential contenders, DO YOU ACTUALLY THINK WE WILL FORGET THAT? All the money in the Koch brothers accounts will not achieve that, GUARANTEED!!!!!!!!!!!!!!!!!!!!!!
Something to think about is our aquafiers. For the last 50-75 years when any and all farmers started using pesticides & herbicides on fields to help kill corn worms, pests etc. and then fertilizers to try to enhance the yield (grow more), the rains come and all this poison goes down into our aquafiers. These are rivers way down deep in the earth. They are being poisoned and have been for a long time. These aquafiers are used to help make ethanol and a lot of it. Rivers on top of the land are drying up and our rivers below the earth are slowly drying up due to the amount of water needed to make ethanol. And due to all the pesticides, herbicides and fertilizers being used on fields where cattle usually graze after harvesting, what they eat, after they are butchered it goes to market, you buy it and you eat it. How many people actually know where their food comes from or their water. We need both to survive. Just some "food" for thought.
Maybe if the government would stop some programs like CRP which pays farmers to not plant their land in crops for a set time to help keep prices up then the price of food and things like ethanol and such would be more affordable. I just think it's crazy that they spend millions of tax dollars to keep land millions of acres of productive farmland from being used. When is the government going to quit spending money?
As Will Rogers once said........"Buy land. They ain't makin' any more of it."
WEL history does repeat its self. i remmeber back in late 70s farmers went thru the same cycle. The farmer in midwest hated jimmy carter, just like they hate pres obama. So they voted in ronnie trick down Reagon in. Crop price dropp to nearly nothing. Corn low as 99 cents a bushel. Well this latest crop of GOP wacks have already dropped the price support for ethanal. IF THEY GET WHAT THEY WANT A GOP NUT, then you can bet the farmers will be hanging themselves again and shooting bankers. Hold on history does repeat itself
Land prices may drop but with 1.3 billion Chinese no longer satisfied with a cup of rice a day i think we haven't seen the end of farmland price rises in the long term.
What is not being said here is that this was an isolated sale at 20,000 dollars! I live very close to that land and in general land here is bringing 12,000 to 15,000. That is still far more than it should to turn a profit on it.
The "excitement" over buying land like it is pure gold will have a complete turn around and when it does the reporters will be here talking about how devasted the Iowa farm front is!
I gaurentee for those of us out here that have operations of 500-1000 acres or less are not able to trade off or even purchase 200,000 dollar combines or 100,000 tractors every three years. Yes things have been good for rural Iowa in the last few years but it was not long ago that 1.80 corn and 4.00 beans were the norm and the profit at the end of the year was minimul! Anyone on there that has a steady paycheck with heath insurance and maybe a 401K are far better off than any of us smaller farmers in rural Iowa.
I wish the news media would report on the average farmer and not all the big splashy corporate money that is buying land in Iowa.
I personally would like to give Ole George W. Bush a couple of acres...
Along with his Dummer Cousin Rick Perry...
Farming is hard work and lots of disappointment if your a small time farmer. If you think it is an easy task you've never tried growing anything. Corporations are willing to take the risk and in the long haul can weather the bad times. Check into what monsanto and other large corporations are doing to our food crops. Big corporations are claiming patent rights to their seed which is genetically engineered. This worldwide take over of the food chain has been quietly happening for several years. Check it out at www.thefutureoffood.com
are you kidding me? why is this so glossed over? no discussion about how soy and corn are fully govt subsidized? this piece makes it look like all farmers are millionaires. really weak piece of reporting.
The piece correctly reports on the role of ethanol on the price of grain. However, noticeably absent from the piece is the role farm subsidies that props up the value of the crops play. It's interesting that these farmers will probably complain about Medicare assistance (a la tea party) and government assistance to the banks, but will deny the effects of government handouts to themselves.
I am happy the US farmer is doing well. Now stop giving them my tax dollars in subsidies to grow corn for ethanol and high fructose corn syrup.
AS USUAL THE MEDIA GET IS WRONG! Only tells part of the story,yes famers are making money, my husbands family farms about what the farmers on the show do.. and are 5th generation farmers. you forgot to mention the average combine goes for $350,000 x 2, tractors 75,000 x 4.. staff, seed , fertilizer diesel fuel etc. etc. etc.......that the average farmer of 60years old still works an average of 80-100 hrs for 6-8 weeks during the spring and again during the fall and that in the 'off' months there is always maintains on the equipment, book work that never ends!!! the million dollar profit may be gross but not after all expenses or don't forget rising property taxes on all that land!
Cry me a river..........
If you wanna bitch about it, get the hell out of it..........
All you ill fated commiters go soak your head. Remember what happened with Gates Rubber when it bought all of th Colorado farm land>>> " A big bust"
Land values have risen way above the rate of inflation, like we had during the 1980s. The story is very misleading about farm market prices, however. Farm prices remain low relative to the historic prices, adjusted for inflation. Prices last year were about $6/bushel for corn. The record high price is above $17 (GDP deflator) or $21 (Consumer Price Index). The show misleads by referring to prices prior to the recent price rises. In 2005, for example, prices were lower, and the show tells about the tripling of prices. But 2005 corn prices were the lowest in history, out of 144 years or more (back to 1866), adjusted for inflation. So yes, prices are much higher than the lowest in history. We have had a huge problem, though, of tax loss farming, where the rich lose money farming to shelter profits from elsewhere, and now, with farm profits, they're buying land at infated prices to have expenses and losses to write off income. 1981-2006 farmers had losses (after "unpaid wages") every year (except 1996) for a sum of corn, wheat, cotton, rice, soybeans, oats, barley, sorghum grain (excluding subsidies). With subsidies, corn farmers have still had net reductions of more than $1 trillion since 1953, vs earlier prices. The 1970s, when we had even higher farm prices briefly. But that was followed by a quarter century of losses on farm crop investments (USDA-ERS), as described above.
They should do a piece on the mid west Kansas farmer. I am 37 with all rented ground, about 400 acres total. That is because the oil price is so high that when ground does go up for sale the average joe can not afford to even attempt buying it. It is usually bought up by the people in the oil industry for the mineral rights below the surface or the land sharks that already have more ground then they can handle. Also most average farmers have a second job like myself. You leave one job and go to the next. Sometimes your lucky if you get to tell the little ones goodnight when you get home. I am not complaining, it is a way of life most wont undersand. I do it to hopefully make a little extra money at the end of the year, and maybe leave something behind for my boys someday. I just really wanted to say we are not all rich millionares out here. Also, wheat prices in 2008 were upwards $12 a bu. Now it is just north of $6 a bu. All time high grain prices huh?