So help me out here. Math was never my favorite subject, but over the years I’ve managed to do some passable adding and subtracting.
Here’s what I just don’t get: 80 acres in Iowa sells for $21,900 per acre. Man! And I thought some of the land up here in Minnesota was expensive (I’m sure some of the flat ground in the SW part of the state is very pricey). But how on earth is anyone going to make money farming land that’s so expensive?
This leads to my arithmetikin’
Current price of Corn: $7.42/bushel. (We’re optimistically assuming that prices will stay at their current near-record levels, though just a few short years ago, 2006 to be exact, they were $2.50/bu or so).
10-year Average yield of the best Iowa farmland: 180 bushels/acre. (We’re assuming here that the market is rational and that the highest-priced land is the highest-producing land).
So 1 ac * 180 bu/ac = 180 bushels of corn per year.
180 bu * $7.43 = $1337.40 of gross income per acre.
So we’re going to take it easy on the buyer (and me, looking up the statistics) and not even factor in the costs of production, even though Iowa State Extension provides them. I don’t know enough about the corn-growing game to parse the data they provide. At any rate, even if it costs us nothing to grow and harvest the corn, we’re left with:
$21900 (purchase price per acre) / $1337.4 (income per acre per year) = 16.37 years until the investment breaks-even.
For what it’s worth:
Seller, Henry Boelsma, a longtime Sioux County farmer, said he was “very happy” with the sale.