The 2007 Land Value Survey has shown an increase in the value of Iowa farmland again this past year, creating a double-edged sword for Iowa farmers.

Michael Duffy, professor of economics, agricultural extension economist and overseer of the survey, said the increased value of farmland means both good and bad things for farmers. “Land value increases increase their net worth, but land value increases can also lead to an increase in production costs,” Duffy said. “But, overall, it’s always better if it’s going up than if it’s going down.”

Bruce Babcock, professor of agricultural economics, said that increase is a positive for those who own land and a negative for those who rent.

“If you own land, it means that you are wealthier. If you rent land, it means your land rent has gone up,” Babcock said.

The average value of all farmland in Iowa in 2007 was estimated to be $3,908 an acre, up $704 from 2006. The value of farmland has been rising since 1999. Duffy said the biggest reason for the increase in land value is the demand for ethanol.

“The ethanol demand, which has increased corn prices, which has increased corn revenue – and land values move as the income moves,” Duffy said. “So, as income improves from the land, then there will be an increase in the value.”

Babcock said the prices of corn and soybeans factor into the future value of land.

“It all depends on what the price of corn and soybeans is going to be in the future,” Babcock said. “That will determine if land values keep going up.”

Iowa State has been conducting the Land Value Survey since 1941, and Duffy said there are 33 million acres of farmland in Iowa. As a result, the value of the survey is important to the “financial health of the state.”

“We continue to do the survey because land is such a valuable commodity in Iowa, and it represents the bulk of the farmer’s assets,” Duffy said.

Duffy said the survey is sent to nearly 1,100 people across the state of Iowa at the beginning of November. He also said farm managers, real estate brokers and rural appraisers are some of the people that make up the nearly 600 responses received every year.