The value of farmland in the Corn Belt is dipping. In Iowa value dropped 7 percent last year.
The drop can be attributed to the record-breaking crops produced by corn and soybean farmers in 2014. The massive supply meant a big drop in commodity prices and that has caused a decline in the value of farmland used to grow corn, according to the Federal Reserve Banks in Chicago and Kansas City.
For the upper Corn Belt, from Iowa to Michigan, it’s the first decline in almost 30 years. Todd Kuethe, from the TIAA-CREF Center for Farmland Values at University of Illinois, says farmland prices follow the path of commodities prices and farm income.
"Farmland prices are like a glacier," Kuethe says. "They do move, but they move very slowly, and it takes a really sustained to move them."
Kuethe says in the next couple years, the overall decline in the Corn Belt’s farmland value could see an additional drop of 5 to 10 percent.
Unlike the Corn Belt, Plains states haven't seen a decline in farmland value. Keuthe says that's because the more a state’s agriculture economy is tied to corn and soybeans, the bigger the drop.
"Their prices usually don't go down as much, but they also don't usually takeoff quite as much," Keuthe says. "So not as much high on the upside, or down on the downside."
Though the loss of farmland value is not likely welcome news, Kuethe says he doesn't anticipate a collapse similar to the 1980s farm crisis.