Iowa farmland values down 6% last quarter of '08

In another sign that the recession is beginning to hit rural areas, land values in Iowa dropped by 6 percent in the last three months of 2008 according to the Federal Reserve Bank of Chicago. Dan Piller of The Des Moines Register reports, "The decline in farmland values was the first such drop in a decade, but it surprised few agriculture experts who have watched corn and soybean prices plunge by more than 50 percent since last summer."

The drop could make it harder for farmers to buy land since banks might start requiring larger down payments. Currently, down payments are on average 35 percent of the appraised value but could increase to 40 percent or 45 percent if the downward trend continues.

Piller writes, "The Chicago Fed report didn't put a dollar amount on farm values. Iowa's 6 percent fourth-quarter land value decline was the largest percentage decrease in the region, which includes Illinois, Wisconsin, Indiana and Michigan." (Read more)