SIOUX CITY - Mike Duffy, Iowa State University's premier farmland price observer, agrees that uncertainty continues to prevail on the future of the state's cropland prices.
"The one, I think, really big question everyone has been asking is if a possible softening of prices will be a bubble," Duffy said in an interview following an Aug. 27 land value program hosted by Security National Bank, Sioux City. "Or is going to be like a tire with a nail in it?
"It is, in a way, an interesting kind of debate. You know all that really matters is the position a farmer finds himself in. If it's one where he or she is going to get into trouble, then it's a bubble burst.
"If, on the other hand, it's a situation where they may not be happy with the price of the land they've purchased, a farmer is going to live with it, and it's just a correction or a readjustment.
"We have to remember that in 2009, just four years ago, we actually had a 3 percent drop in land values so that was kind of a correction, and I think that's what we're going to be looking at now."
A member of ISU's economics staff since 1985 and responsible for the annual farmland survey since 1986, Duffy said, "We've had the boom here in the last several years, and that has gotten a lot of people's expectations way up.
"We've seen the prices going up, and the prices going down.
"There have been a couple of really strong auctions - a couple at $14,000 and one for $10,000 per acre - within the last month.
"At the same time there's been a couple not so strong. Everybody is in a kind of wait-and-see situation.
"Prices in the northeastern and southeastern part of the state have seemed to be worse than others. It's hard to say why, considering more of last year's drought was down in the southwest."
This year's delayed plantings and future moisture conditions will "very definitely" impact pending land values," Duffy said.
"These land values are tied almost exclusively to gross farm income," he said. "As gross income goes, so land values will go. If we have uncertainty, low prices or low yields, we're going to see the gross adjusted. When gross adjusts, land values will adjust."
When asked the impact of lower land values on producers, Duffy said the "quick answer" will be overextended producers from ages 35 to 55.
"These individuals ... have been a little more aggressive and have gone out and either bought land or signed multiple year leases at pretty high levels," Duffy said.
Duffy, a past director of the state's Beginning Farmer program, said Iowa's younger farmers or those just getting started need to keep a few things in mind.
"Things are never as good or bad as they seem" when viewing the land price picture," he said. "Right now each young farmer will have to consider his or her situation based on circumstances and resources.
"If land is too high, they'll have to wait to build capital before moving ahead.
"One hundred years ago, we had the same issue to work on. That was in the 1920s when it was called the land tenure gap.
"The big key for everyone relative to land prices is that we're just going to have to watch and see what's happening to income.
"That is going to be what's driving it."
Rex Wilcox, Stalcup Ag Service, of Storm Lake, said the land price question creates "a lot of anxiety" about the future and the role crop prices will have on them.
"In our trade area, farmland prices have held up and are relatively good," he said. "Some are higher than others with others leveling off depending on the neighborhood, but I'd say the market has been holding up well."
At the same time, Stalcap said, "We've seen farmers concerned about their earning potential coming into next year, particularly east of Storm Lake where there are poor crops as compared to those farther west that are progressively better.
"It appears producers in western Iowa are going to do very well. The major differences will be income potential."
Wilcox said that while federal crop insurance "will still provide a pretty good backdrop" for a number of producers, there's questions whether new crop corn prices will be the basis for payments.
"Right now crops are moving ahead rapidly towards maturity, but we need them to move ahead rapidly because they're behind," he said. "The situation is one of this year's income potential as compared to 2012, which was outstanding.
"Producers had really good crops with nice profits. Looking ahead you can see there's not as much money available."
During the 2013-2014 marketing year, Wilcox suggested farmers become more risk-management-minded, making row crops "as risk-proof as possible."
Wilcox said 2013 serves well as an example in where some areas' yields were "very poor" with "very good" crops elsewhere.
The "weather-proofing" of crops he said will be among factors in a good future strategy for farm operators.