New farmland prices have economists and ISU agriculture students concerned that younger Iowans could be driven away from farming.

As farmland values rose 15.6 percent to an all-time high of $2,629 per acre in 2004, farmers are having to deal with a double-edged sword effect.

Although the rise in Iowa farmland values will benefit those owning farmland, for farmers renting land, the increase could prove to be a heavy burden.

With the new price, those who own land will see their net worth increase, but those who rent land will find themselves having to pay more.

“It makes it very difficult for a younger person to get into agriculture,” said Michael Duffy, professor of economics.

Matt Bormann, who graduated from Iowa State in 2001 and began farming four years ago in Kossuth County, echoed Duffy’s concern.

“With higher land values, landlords want more money for rent because their land is worth more,” Bormann said.

Shane Stoaks, who began farming three years ago in Adams County, agreed with Bormann.

“Higher land values cause all of the rent prices to be elevated, leaving a smaller margin of profit for farmers,” Stoaks said.

Despite the high land values and rental prices, Bormann, who farms 355 acres, and Stoaks, who farms 120 acres, are finding ways to survive.

“I find that forward contracting, keeping things simple and listening to the experienced farmers are the best ways to succeed as a beginning farmer,” Bormann said.

The best thing a young person can do to stay ahead in farming is to sell crops ahead of time, he said.

Stoaks said beginning farmers should talk with older farmers in their area because they might be willing to give younger farmers a chance to farm without having to pay high rent.

“For me, I was able to farm on shares with an older landowner, and that has allowed me to not take such a large risk right off,” Stoaks said.

Erik Christian, graduate student in agronomy, said he is eventually hoping for a return to farming

after graduation and is concerned about the impact higher land values will have on beginning farmers.

“In my situation, buying farm ground is probably the last thing I’d ever do if I were trying to get into farming. It’s a large capital investment, and you really don’t need to tie up all of your money in farm ground when you are trying to start farming,” Christian said. “I’d rather put my money into livestock or equipment.”

Buying land is not in the best interest of beginning farmers because the rate of return of owned land is not as good as some other assets, Duffy said.

Higher land values also affect those who have been established in farming for a long time by allowing them to retire more quickly, retire in better shape and build their estates, Duffy said.

Nearly half of the farmland in Iowa is owned by people over the age of 65, he said.

With an aging population, one might think there would be a lot of land to be sold, but most of the land is handed down to family members, Duffy said.

Higher land values may make the heirs to the land more interested in selling, however, he said.

“The high land values would look pretty attractive right now to those approaching retirement,” said Dave Stensland, who has farmed full-time for 35 years and farms 1,000 acres in Story County.

There is kind of a hierarchy to these land values, Duffy said.

Older farmers are the best off.

Middle-aged landowners are somewhere in the middle, and beginning farmers are the worst off, Stensland said.

Although the higher land values might make it more challenging for a beginning farmer to get established, it has always been difficult to get into farming, Stensland said.