Farmland values plateau with occasional declines

High interest rates and lower commodity prices are front-of-mind factors for farmland buyers, said Farmers National Co., a large farm management and real estate company. “Despite these negative pressures, the land market has remained relatively resilient but shows signs of settling in general, including single-digit decreases in specific areas,” said Paul Schadegg, senior vice president.

Schadegg characterized current conditions as part of a stair-step pattern over the longer term. Land values rose during periods of increased farm profitability and leveled off in tandem with commodity markets. Farmers are the dominant buyers in the land market, so agricultural profitability was expected to be the leading factor in land values in the months ahead.

“There remains a strong appetite for land as an investment from outside investors and ag producers,” he said. “We anticipate variations in land value changes across our regions in the United States. Areas with strong supply/demand scenarios, an expansion of alternative land use projects, and irrigation water concerns may experience more dramatic increases or decreases in values.”

Cropland values have accelerated since 2020, according to the USDA, to reach a nationwide average of $5,460 an acre in 2023, an increase of 33% in three years. The USDA was scheduled to release its annual Land Values report on Aug. 2.