An 80-acre field in Sioux County, Iowa, sold Thursday for $21,900 an acre. The sale, conducted by Vander Werff & Associates, Inc. of Sanborn, Iowa, featured four farmers -- not investors -- bidding beyond the $20,000 threshold, setting what Rich Vander Werff, the auctioneer conducting the sale, believes to be the highest price paid in history for farmland in Iowa.
The farm, located in east-central Sioux County, has a corn suitability rating (CSR) of just over 84 and is within 2 miles of the town of Boyden, both major selling points for production and marketing, the auctioneers say.
So, can this kind of land deal work? Farmers are split. Some say a price of this magnitude is getting dangerously close to a scenario not unlike the bursting bubble in the housing market in the last few years. But others say with a more prudent approach, even land at that price, under the right circumstances, can work for the farmer.
"Land does not have to cash-flow because over time, inflation will allow it to pay for itself. And all you have to do is not farm at a loss, run enough acres, and one or two really good years will go a long way to paying it off," says Agriculture.com Farm Business Talk veteran advisor nebrfarmr. "I guess as long as you aren't borrowing much of the money, to have to worry about being upside down on the land, in the event of a value drop, it might work."
