Do Wind Turbines Increase My Iowa Farmland Value?

By: Iowa Land Company

Do Wind Turbines Increase My Iowa Farmland Value?

A question that we have been asked recently is, “Do wind turbines increase my Iowa farmland value?” We have seen an increase in farms with wind turbines brought to market in 2019. Today, we dig a little deeper on what happens to farmland values when wind turbines are built on Iowa farmland. Some important factors play large roles in Iowa farmland values, farmability, income potential, CSR2 values, and location, to name a few. These factors still stay true when selling farms with wind energy, but the addition to wind energy can alter a few of these key components can increase or decrease your farmland value.

 

 

Farmability 

Farmability has changed the outlook on farmland values over the past 20 years. With larger equipment, it has made it faster and easier to sow America’s food and fiber. Operators are farming a larger number of acres with less manual labor around the farm. Many are relying on the advancement in technology to increase production. A farm that is square with less encroachment on a farm is ideal to complete a harvest efficiently. Wind turbines can create obstacles on a farm rather easily. Turbine access can lead to loss of acres, a change in planting schemes, along with soil compaction. If a farm has multiple access points for a wind turbine, this can put negative pressure on farmland values. Recently, we worked with a farm in north central Iowa where the farm had two wind turbines on it. The access routes were not designed well whatsoever. Each turbine had different interior routes with one even zig zagging between low spots in the farm. If you are in negotiation with a potential turbine installment, utilize a fence line for access routes. This can keep your farm’s farmability at par with its previous state. Talking with locals, they enjoy the additional income but do not like farming around the turbines.

 

Income Adds Value

Income is a key factor in what farms are worth in today’s time. Farms with near 100% income potential are most commonly higher valued farms. If you can increase the farms ROI by adding an income generating source, such as a wind turbine, your farmland could reflect an increase in value. The average turbine payment in Iowa is around $9,000 annually. We have seen, for example, some turbines pay $4,000 each annually; contracts of this value do not increase the farms value much, if any. Others have an increased contract scale starting at $16,000 per year up to $32,000 per year at the end of the 30 year contract. A lease contract of this structure can increase farm value $1500-$2000 fairly quickly. 

 

Location

Location always trumps income in the farmland world. For instance, in O’Brien County last month, two farms located side by side were brought to market with one turbine on each of the farm in identical locations. The farms carried 97 CSR2 and 100% tillable. On auction day they brought $12,200 which is what they were worth as bare farmland. The turbines carried and additional $225,000 in income on each tract from the wind energy lease.

 

Future Outlook On Wind Energy

Wind energy is a driving force with wind farms popping up at a record pace. In Iowa alone, over 40% of Iowa electricity is generated by wind. Additional income is a plus for local operators and investors. There are a few drawbacks and pressure points that are starting to build against the turbine expansion projects. Local residents are going to county boards looking for more regulation on distance restrictions when building wind turbines. Many residents believe the noise from these turbines are interfering with sleep and ect. At the end of the day, Iowa farmland is worth what someone is willing to pay for. For turbines to increase your farms value, they must be built in a good location and carry a significant ROI for 20+ years. For more information on Iowa land values, contact your local Iowa Land Company Broker. 

 

farm real estate Palo Alto County Iowa

 

If you’re considering selling farmland, reach out to one of our Land Brokers at Iowa Land Company. It’s important to first understand your farms current value, take a look at how aggressive the local operators are within your farms location is, and then come up with a plan how to yield the absolute most value out of your farm. To get the process started contact Iowa Land Company headquarters at P: (515) 962-5048 or E: info@iowalandcompany.com

 

 

 

 

 

 

 

Iowa Land Company is a full-service farmland auction company that services in all 99 counties of Iowa. We transact all types of land in Iowa. Want to know what your land in Iowa is worth ? Get a | Free Farmland Evaluation (Click) | from one of the trusted agents at Iowa Land Company.

 

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IOWA FARMLAND AUCTION COMPANY

Our company was built to generate Iowa land transactions combining two things, land marketing experience and farmland sales experience. Our marketing company and land salesman are focused on Iowa dirt! Iowa Land runs deep within each person that makes up our company. We have a  passion for land and that’s what we know. Each person has their strengths and we mesh those strengths together forming a land company that is powerful in both land auctions and private treaty land sales.

 

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Farm Location

Location can be the biggest variables when calculating land value so it’s important to not over look this step.
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CSR2 Value

Yes we certainly do consider your Corn Suitability Rating (CSR2) value when giving our traditional farm appraisal because it is very important.
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Improvements

We want to hear your story. How has the farm been taken care of? Who has farmed the farm? Etc…
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Current Market

We look at what is currently on the market, how long similar farms have been on the market, for what price and how that farm compares to yours.
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Recent Sales

We have access to our in farm sales report that we file per county. We keep a close eye on recent farms located near your farm.
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