2022 has been one for the record books in many ways.
One big notable has been farmland as an unprecedented amount of acres have hit the auction block, with per acre price records falling time and time again.
Thus far in 2022, more than 133,000 acres of Iowa farmland have sold at auction - up 8% on the year. According to Jim @theLandTalker Rothermich, there are 13,000 acres set to be auctioned in December which will leave 2022 narrowly surpassing last year’s record 142,756 sold.
Jim also noted that we saw hyper-volumes from January through October that put 2022 on its record-setting path.
Bruce Brock is the Founder and President of Brock Auction Co., Inc. and auction Realty of America based in Le Mars, Iowa. He is a 3rd generation licensed real estate broker and the first auctioneer to hold both the World Champion and International Champion titles in the same year while also winning all 3 major livestock auctioneer championships.
Bruce! Your corner of Iowa is on fire, home to the priciest row crop real estate in the United States. Before we get into the reasons behind these absurdly high prices, can you tell me about a few recent notable sales?
In October our company set the all-time high state record at $26,250 per acre on 55.6 acres in Plymouth County. It was a quality piece of land sold at an estate auction.
A neighboring farmer was the winning bidder but that was after three bidders were still active at $25,000 - all farmers.
A few weeks later that record was shattered as 73 acres in Sioux County sold for $30,000 an acre.
Alright that brings me to my next question - WHY?!
What makes ground in the area worth that much or what would push buyers to be willing to fork out obscene amounts of money auction after auction in northwest Iowa?
For starters, we have incredibly diverse marketing opportunities with everything from terminal facilities in Sioux City to a large ethanol presence and one of the highest concentrations of livestock in the country for feeding.
Cattle, hogs, and laying chickens in confinement provide tons upon tons of manure each year - a tremendous asset to our row crop operations.
This abundance of manure is not only cost-saving from a crop input perspective but it puts nutrients and organic matter back into the soil, adding to productivity.
Ah ha! I feel like this is a lightbulb moment for me (and probably a few readers). Unique combination of demand, alongside high quality, highly productive soils and less expensive inputs make it a highly desirable area to farm.
Who are the buyers? Are prices running higher with outside investment?
We have seen outside interest increase post-Covid but most land in the area is purchased by area farmers who are looking for opportunities to expand.
Susan’s HOT TAKE: Sales in Bruce’s area of NW IA are producer-driven while other areas (like my nearby central Illinois) see a fair amount of outside investors vying for acres.
For those reasons, Iowa sees these wild land prices while some areas of Illinois are better-known for their absurdly high cash rents. $30,000 an acre in IA is just as wild at paying $600+ cash rent in IL.
Different markets - different sets of circumstances.
Special thanks to Bruce for chatting with me earlier today. I feel like I actually know a thing or two about northwest Iowa now. If you would like to learn more about Bruce and Brock Auction, visit them at BrockAuction.com or call Bruce at 712-548-4634.
Hi Doug! Before we dive into my questions, tell me a bit about Hertz Farm Management.
We are an Iowa-based firm focusing on all things farmland. We manage, sell We manage, sell, acquire, and appraise farmland assets for individuals, families, and institutions.
We have 14 offices scattered across the Midwest, including Iowa, Illinois, Minnesota, and Nebraska from which we manage 650,000 acres of predominantly row-crop farmland, along with special projects in both Texas and Arizona.
In our 2022 fiscal year, we closed the sale of more than 57,000 acres totaling more than $650 million in value, appraising more than 120,000 acres across the Midwest, through more than 850 appraisal projects.
What is your background, Doug?
I was born and raised on a corn, soybean, and cattle farm in west-central Illinois.
I attended the University of Illinois for both a Bachelors (Ag Finance) and Masters (MBA) degree, and I have since worked in the Midwestern farmland business for 25 years. I’m a licensed broker in several Midwestern states.
One of the main reasons I wanted to talk to you today is because I constantly get asked the question - what is the difference between CSR2 and PI? Can you shed some light on the different ways that a few major row crop states measure soil productivity?
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