Average Iowa farmland value is now estimated to be $7,943 per acre — a drop in value of $773, or 8.9%, per acre. Land values were determined by the Iowa Land Value Survey, which was conducted in November by the Center for Agricultural & Rural Development (CARD) at Iowa State University. Results from the survey are similar to results found by the Realtors Land Institute and the Federal Reserve Bank of Chicago.

As farmland values do not rise or fall uniformly across the state, the survey examines values by crop reporting districts, each of the 99 counties individually, low-, medium- and high-grade farmland, and also averages the state as a whole. The $7,943 per acre and 8.9% drop in value represent the state as a whole, CARD explained.

While this year marks the largest decline in farmland values since 1986, it is only the second year since 1999 that the survey has shown a decline in farmland values. After hitting a historic peak in 2013, values have returned to a mid-point between 2011 and 2012 values. Despite the decrease, farmland values are more than double what they were 10 years ago, 81% higher than 2009 values and 18% higher than 2011 values.

"I think we have seen a peak for the time being," said Michael Duffy, a retired Iowa State economics professor and extension farm management economist, who conducted this year's survey. "Commodity prices and farm income are settling back to more expected levels, and I think land values will probably move sideways for a while. Many people think this report indicates the beginning of another farm crisis, but land values are still considerably higher than they were just a few years ago."

The value of all grades of farmland fell, with high-grade farmland taking the largest hit and losing a full 9% ($974 per acre) of its value. "The reason high-grade farmland fell in value faster than low- or medium-grade farmland is because it had increased in value faster over the past few years," Duffy said. Medium- and low-grade farmland fared slightly better, losing 8.5% ($688 per acre) and 7.9% ($420 per acre), of their values, respectively.

Corn and soybean prices started falling in 2013, and as a result farm income dropped. The most recent U.S. Department of Agriculture net farm income estimate showed a record high income in 2013 but a 23% drop in net farm income for 2014, CARD noted.

"The drop in farmland value is due to the drop in commodity prices," Duffy said. "Pressure could come if farmers incurred debt in anticipation that commodity prices would continue. I think all farmers will have a cash flow problem for the next 18 months or so. If farmers still have equity in their land they should be able to refinance, but farmers who got over extended will be in trouble."

Of respondents that listed positive and/or negative factors influencing farmland values, low interest rates were the most commonly cited positive factor, and lower commodity prices were the most frequently cited negative factor. Other negative factors mentioned included high input prices and an uncertain agricultural future.