The American farm has been losing its value. Since 1981, the price of an average acre of farm land has fallen some 7 percent in the continental United States. In the Midwest, the skid has been much steeper. Iowa farm-land values, for example, are down an average 28 percent.
The good news, however, is that the worst appears to be over. A consensus is emerging among economists and real estate experts that farm-land prices are stabilizing.
''I don't think it'll go much lower,'' says Terry Francl, an agricultural economist with Continental Bank in Chicago. ''It's probably going to get a little bit better.''
''The prime agricultural land, I believe, has stabilized,'' agrees George Schwab, president of AgriVest Inc., an investment advisory firm specializing in farm land and based in Glastonbury, Conn.
That should be welcome news to farmers, who have seen the value of their farms decrease in recent years. It should also be good news to investors, Mr. Schwab says. He is currently trying to interest several large pension funds in diversifying into agricultural land.
Right now farm land is giving investors a reasonable rate of return - about 6 to 7 percent - because many farmers are interested in leasing land to grow crops on, Schwab says. Of the eight farmers from which his new company has bought land , all eight have stayed on to farm it. And, he adds, agricultural land has a real potential to appreciate for those investors patient enough to wait for an upturn.
Some of the best buys, he says, are in the corn belt, where land appreciated more quickly than the national average during the 1970s - and plunged more dramatically in the '80s. For example, in the Seventh Reserve District, which includes Iowa, parts of Illinois, Wisconsin, Michigan, and Indiana, the average value of good farm land increased nearly five times between 1970 and the 1981 peak, according to the Federal Reserve Bank of Chicago. Since then, the average value of farm land has declined an estimated 18.5 percent.
In a July 1 survey of area agricultural bankers, ''there was still somewhat of a pessimistic attitude,'' says Peter J. Heffernan, an economist with the Chicago Federal Reserve Bank. But ''some things have turned around since the survey.'' Unexpectedly heavy Soviet buying of US grain has brightened the farm industry's outlook.
Still, there is little agreement that land prices will rise dramatically anytime soon.
Mr. Francl, for example, is not optimistic. Barring an unforeseen and dramatic squeeze on world food production, he says, ''there's nothing to suggest that things are going to turn around all that rapidly.''
Even Schwab is unsure what will happen. The appreciation and rate of return in agricultural land has been better than commercial real estate during the past 25 years, he says. Prospects for the future, however, depend very much on the inflation rate, commodity prices, and the market for US exports.
Doug Wildin sees an imminent upturn if, as he predicts, the general perceptions of a world food surplus change to a perception of food shortage.
''I think there's a good possibility our land prices will double in five years and triple in 10,'' says Mr. Wildin, a Hutchinson, Kan., real estate broker who sells large farms and ranches in the West. Many buyers are simply waiting until prices reach bottom, he adds.
Many farmers resent the prospect of outside investors gobbling up farm land.
In July, a Chicago investment group announced plans to buy up land from financially strapped farmers and then sell shares in the venture to the public. But the announcement of the venture, called Consolidated Family Farms, set off howls of protest. Several farm organizations complained loudly that families would be thrown off their farms. The investment group has been barred from operating in Iowa and Kansas.
Nevertheless, Schwab says he believes farmers are beginning to welcome outside investment, which will bring a new infusion of capital into US agriculture. The problem is not convincing farmers to sell, he says, but convincing pension funds to buy. ''It's going to be a long education process,'' he concedes.