The Price of Scarcity: Iowa Farmland at a Record High

This Week In Ag #147

“Location, Location, Location.” Those words were forever ingrained in our heads by our real estate agent when my wife and I were purchasing our first home. Evidently, the same sentiment applies to purchasing farmland.

Last month, a state record was broken when a 35.5-acre farm in Sioux County, Iowa, was sold for $1.13 million at auction. That’s a price tag of $32,000 per acre. Keep in mind this is Iowa farmland, not the San Joaquin Valley. No award-winning vineyards or established almond groves canvass the landscape. This is corn and soybean country.

As for the location, the last man to raise his hand at the auction has land adjoining his new property. In farming circles, that’s the definition of a highly motivated buyer.

This area of northwest Iowa is known for its strong livestock market. Swine and cattle consume lots of grain, and local farmers utilize these markets. Livestock feeders may pay a premium for locally grown grain to cut down on transportation costs. The previous record of $30,000 per acre, sold in 2022, was also purchased in Sioux County. A week before the record sale, two farms in the region sold for over $22,000 per acre.

This $32,000-acre plot is prime Midwest farmland. It holds a corn suitability rating score (CSR2) of 94.5. CSR2, developed by Iowa State University, is a measure used to classify the productivity of soil based on factors such as soil type, depth, slope, and water holding capacity. Scores range from 5-100. A score of 83 or above is classified as a very productive soil. The average CSR2 score in Iowa is 68.

Still, there’s no denying that such prices raise eyebrows, especially when much of the farm economy is in dire straits, and when the USDA is in the process of sending US farmers an additional $12 billion, on top of the $40 billion they’ve received in 2025 direct payments. Ironically, Iowa State published its 2025 Land Value Survey the week after this historic purchase. Overall, farmland values increased 0.7% across the state. The average price per acre for farmland across the Hawkeye State is $11,549.

So how does $32,000 farmland pencil out? It doesn’t. Conventional farmland financing typically requires 35% down. Assuming you have that on hand, with a 30-year loan at 6.75% interest, you’re looking at an annual payment of $1,642 per acre. Let’s say you can raise 250 bu/A corn (that’s over 10% above the county average of 225) and sell it for the FCI price of $4.70/bu, that’s gross revenue of $1,175 per acre. And you’ll still have to pay for all your production expenses, equipment and labor.

As for the driving factor for purchasing land, the top factor in Iowa State’s survey continues to be Limited Land Supply. This speaks to those famous words about farmland, which have been passed down for generations: “They ain’t making any more of it.”