Look to ‘Pay Top Dollar for the Right Farm’ in 2024
Last December, some analysts predicted 2023 would be the year farmland prices would finally start to level off and, perhaps, even decline.
That prediction hasn’t materialized quite the way many analysts expected, says Paul Schadegg, senior vice president for real estate operations at Farmers National Company.
“The land market is showing a lot of resiliency, and we’re still seeing those really strong values being paid for,” he said on Monday, during a discussion on AgriTalk with host Davis Michaelsen.
The Federal Reserve Bank of Kansas City report released in late November echoed Schadegg’s perspective. “Growth in non-irrigated farmland values softened further in the third quarter but remained firm, with increases averaging about 5% from a year ago in most regions,” the report said.
In October, USDA-NASS reported that 
the average value of U.S. cropland (irrigated and nonirrigated) was $5,460 per acre in 2023, increasing 8.1% from 2022. From 2009 to 2023, cropland values increased 107%.
For U.S. pastureland, the average value in 2023 was $1,760 per acre – a $110 increase over 2022 and a 66% increase since 2009, according to USDA-NASS.
Quality Ground Is Still In Demand
Schadegg says his perspective is that U.S. farmers’ focus now is squarely on buying what they perceive to be productive acres, defined a couple of different ways.
“They're willing to pay top dollar for the right farm – whether it's location, whether it's quality – they're willing to pay for that, and they've evidently held back some cash to make that purchase,” he says. “There’s still competition for those farms.”
A recent article by Farm Journal Editor Clinton Griffiths demonstrates that fact. Read it here: Look Out Iowa! Cropland Auction Sets Fresh Record in North Dakota
Not all land is not bringing top dollar at auction, Schadegg adds. “Land that has poor drainage, subpar soils and other agronomic issues gets significant discounts,” he says.
While rare, Schadegg says he has seen some parcels get “passed over” by farmers this year.
He anticipates that will continue in 2024 as he sees the equity position farmers have had over the last three years continue to narrow.
“When you hear what the Federal Reserve has to say about the increase in loan requests, I think that’s definitely a sign that guys have kind of burned through a lot of that cash (they had available),” he says.
Moving into 2024, Schadegg believes farmers will continue to evaluate land for purchase, using one of two trains of thought.
“I think some are saying, ‘I’m going to sit back and see where these new values settle.’ Then, at the same time, if an opportunity comes up to purchase a piece of land that fits into their operation, or maybe is adjacent, I think they’ll continue to be pretty motivated,” Schadegg says.
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Listen to the AgriTalk discussion on land values here:
