FIVE TRENDS IN THE FARMLAND MARKET THE EXPERTS WEIGH IN ON THE BUSINESS OF FARMLAND.
With $3 corn and $9 soybeans, it’s easy to see why farmland values are declining. But don’t take our word for it. There are scads of reports from industry experts, including:
TheKansas City Federal Reserve, which last month suggested farmland prices have softened from 3% to 5% from a year ago in Nebraska and Kansas.
TheChicago Federal Reserve, which reported farmland values have declined an average of 1% in its states, which include Illinois, Indiana, Iowa, Michigan, and Wisconsin. However, value in Wisconsin and Illinois actually increased, while Iowa's dropped 6%.
Here are some of the trends we’re seeing.
High-quality land is still a valuable assetsays David Klein, managing broker and auctioneer with Illinois-based Soy Capital Services. Take the August 25 sale of 640 acres east of Peoria in Washington County, Illinois, for example. The land averaged $11,600 per acre, with ranges from $9,800 to $11,600 per acre. “That tells me that high-quality farmland continues to be in high demand,” Klein says. All over the Corn Belt, we continue to hear that farmers are paying good money for high-quality land. Demand for that land will continue, Klein reckons.
Farmers are still buying.In the Washington County example, Klein says farmers bought most of the tracts. This continues to be the case in most sales, although we’re seeing more investor action in some of the sales we’ve tracked. “People are trying to make the case that outside investors are propping up land values,” says Steve Nicholson, analyst with Rabobank Financial. “However, farmers are still buying the majority of the land. Are there outside investors? Yes. But it’s not the majority.”