Real Estate

44 Million Acres: The New Frontier of Farm Consolidation and Growth

Tue, 10 Feb 2026 17:46:42 GMT

At the 2026 Top Producer Summit , Farm Journal Intelligence unveiled new farmland insights derived from predictive modeling and deep-data analysis. The research focused on the shifting landscape of land acquisition, identifying which operations are at risk of consolidation, who is positioned for growth and where the most significant opportunities lie.

Here are the six primary findings for farm businesses:

1. Scale Does Not Immune Operations from Consolidation.

(Farm Journal)

While smaller operations face the highest risk — with 58% of small farms “at risk” for sale or acquisition before 2030 — size is not a complete safeguard. Research shows the risk of consolidation or ownership transfer never drops below 27%, even for the largest operations. Furthermore, crop diversity made minimal impact on these odds; the likelihood of transition remains constant whether a farm produces one crop or more than 11.

2. Geography Trumps Diversification.

(Farm Journal)

Regional location is increasingly becoming a primary driver of financial success, often outweighing the benefits of operational diversification. As regional market divides grow, farmers and ranchers are finding that local market conditions and individual circumstances dictate their trajectory more. State-level or even county-level effects are more indicative of their situation than national trends.

3. The 44-Million-Acre Transition.

(Farm Journal)

Nearly 15% of American cropland is projected to change hands within the next three years, driven by generational transfers, continued consolidation and economic pressures. Farm Journal data identifies the Midwest as the epicenter of this shift, with roughly 12 million acres likely to transition. Nationwide, that total reaches a staggering 44 million acres.

4. Mapping the “Sweet Spot” for Expansion.

(Farm Journal)

By plotting cost per cropland acre against the volume of land likely to transition, clear opportunities for expansion emerge. For producers looking to grow their footprint, the most viable opportunities are currently concentrated in Kansas, Texas, North Dakota, Missouri, and Oklahoma, according to this research.

5. Integrity Is the Top Currency in Rental Markets.

(Farm Journal)

When more than 400 landowners were surveyed about tenant selection, integrity ranked as the most critical factor. Interestingly, age was reported as the least important factor. For producers looking to secure rented ground, a reputation for character and experience outweighs both seniority and youth.

6. The “Willingness” Factor in Technology.

(Farm Journal)

Producers most inclined to expand share a common trait: a higher comfort level and rate of adoption with technology. Crucially, this is not necessarily tied to technical skill or existing expertise, but rather to mindset and action. The most growth-oriented producers are defined by their willingness to try new technologies rather than their current mastery of them.

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Land Values Show Signs Of Softening, But Farmers And Small-Town Investors Remain Bullish

Thu, 08 May 2025 19:56:09 GMT

The land market across the Midwest continues to show strength in the second quarter of 2025, though there is a bit of price softening showing up in some areas.

“We have historic low supply and good demand, so that has really kept prices at a pretty stable level,” said Colton Lacina, vice president of real estate at Farmers National Company (FNC), based in Omaha, Neb., on Thursday.

“Looking across the different land groups, land is probably down 1% to 2%, but farmland has been on an upward trend for the last three to five years and is still strong. This is the first year recently of it turning a bit to the negative side, though nothing extreme,” he added.

Across the industry, FNC reported in January that land listings are down, on average, 25% from the active and accelerating value market experienced between 2020-2023.

Trends In Bellwether States
Lacina said higher interest rates, lower commodity prices and ongoing trade disputes have contributed to the slight downward movement of farmland values. The small reductions in value have shown up in key farming states, including Illinois and Iowa.

The 2024 Iowa State University Land Value Survey, released in mid-December, reported a 3.1% drop in farmland prices last year, bringing the average price per acre down year to $11,467.

“This decrease marks the end of a five-year trend of rising land prices, which included dramatic annual increases of 29% and 17% in prior years,” wrote Brooke Bouma Kohlsdorf, for American Farmland Owner .

While the nominal value in Iowa is lower than in 2023, it remains above 2022 levels. That reflects the lingering strength in the market today despite the correction, Kohlsdorf wrote.

In Illinois land values are likely to see a 3% decline in 2025, according to Nick Paulson, Gary Schnitkey and Carl Zulauf at the University of Illinois. However, they said multiple arguments for continued strength in farmland values could also be made.

“First, farmland remains an attractive asset with total returns (current plus capital returns) that are competitive with other asset classes, particularly over longer holding periods,” the Illinois economists wrote in a farmdoc Daily article last November. Second, turnover rates for farmland are expected to continue to remain low meaning that purchase opportunities are scarce. Finally, as farm operations continue to expand and alternative uses for farmland continue to grow, demand for an asset in fixed or declining supply will continue to remain strong.”

A report by the National Council of Real Estate Investment Fiduciaries shows that U.S. farmland delivered an annualized return of 10.2% over the past 30 years , outperforming many traditional real estate assets.

Farmland has been a solid investment for the long-term.

(National Council of Real Estate Investment Fiduciaries)

Off-Farm Investors In Play
Lacina said he sees farmland purchases remaining strong this year with farmers and nonfarmers alike, noting he is seeing an uptick in off-farm investors, which he said fall into two different camps.

“We have institutional investors, and then we have what we call more of a local investor, and we’ve seen a lot more local investor interest in the last month,” he noted. “Potentially a businessman or businesswoman in town, who maybe own the hardware store, and are looking to diversify and get into farmland,” he said.

With the ongoing turbulence in the stock market, Lacina said he expects interest from buyers in rural communities to continue as land is seen as a stable investment for the long-term. He also doesn’t anticipate farmers will stop buying land, either, as the opportunities to purchase local parcels arise. Many farmers are paying cash.

“We’re still seeing a lot of cash transactions with our largest buying group, which is the agricultural producers,” he said. “We do see some farmer land purchases being financed, but I’d say most are still cash buys.”

Three additional types of individuals and organizations Lucina said he sees buying farmland now include:

1. Individuals interested in growing their own produce and/or developing a local market for produce. “There’s definitely an increase in demand for smaller acreages that are going into large gardens for what I call micro-farming,” Lacina said.

2. Recreational activities continue to drive land sales in many areas. “Individuals are looking to get out of the city and have 80 acres and a little cabin. We’ve seen strong demand there, and I don’t see that falling off, really,” he said.

3. There is increased demand by individuals and companies that want to use solar energy. “The wind business has slowed down, while solar has picked up,” Lacina said.

He pointed out that there are two different kinds of land purchases commonly made for solar. One is individuals who either want solar for their own home or as an investment in supplying local communities. The second type is for a corporation’s use.

“Geographically, there are certain areas where that’s really hot right now. Some areas in Illinois have seen a lot of activity. Also down in South Texas, with the new data centers being built, we’re seeing a large request for land around those data centers for solar,” Lacina explained. “There’s increased demand for electricity, which can take years to come on the grid if you have to build a coal plant or a nuclear plant, and solar is much quicker.”

Lacina said spring historically is the slowest sales period for the land market year-over-year, and that has been true for 2025.

“As we work through summer here and into the early fall, we will probably see an uptick in supply,” he said. “How big that supply is going to be, we don’t know, but we believe there will be more opportunities coming to market.” Those opportunities have the potential to benefit buyers and sellers alike, he added.

Get more of Lacina’s insights about land values and where they’re headed on AgriTalk .

Your next read: Farmers Back U.S. Efforts To Rebalance Trade With China Despite Economic Hardship

What's Happening In The Land Market? Your Regional Breakdown

Mon, 06 Jan 2025 17:49:53 GMT

A new report from Farmers National Company (FNC) shows land values have remained relatively stable in the Midwest, with two types of buyers largely driving demand.

“There are many factors for buyer motivation, but much of it can be explained by mindset translating to demand,” said Paul Schadegg, senior vice president of real estate operations at Farmers National Company. “Farm operators continue to be the primary buyers of ag land. Their mindset or motivation revolves around reinvesting in their farm enterprise, expanding operations, and utilizing today’s farm equipment fully. Location of land offered for sale also plays a large role in their decision making, as often this land has not changed hands for generations and once sold, may not be sold again.”

FNC predicts farmers will remain the primary land buyer in 2025. The second largest buyer is investors, who Schadegg says are driven by a completely different motivation.

“There is virtually no emotional motivation, as buying decisions are based on return on investment or anticipated appreciation of land value,” Schadegg says. “Many land investors have not experienced the rise and fall of agriculture cycles but fully appreciate the long-term value of land. As pressures on the ag economy increase, investors stand ready to bid on land that fits their investment criteria.”

With farmland’s long-term appreciation and annual return on investment, there are currently more buyers than sellers out there. The company reports land listings are down across the industry, on average, 25% from the active and accelerating value market experienced between 2020-2023.

Regionally, this looks like:

Indiana, Ohio, Michigan, Kentucky:
Sales have decreased in this area compared to the previous three years. Jay VanGorden, area sales manager for the east region, says land values have seen minimal price drops for highly tillable and quality soil-type farms in most areas, but farms with lower-quality soils, lower tillable percentages, and poorer drainage have dropped off more significantly.
Illinois and Wisconsin:
Land sale values have increased in some parts of this region. Nate Zimmer, area sales manager for the east-central region, says record-breaking sales aren’t as common as they were though, and no-sales are popping up more - a sign seller and buyer expectations are not in alignment. Zimmer adds the method of listing is shifting more toward private treaty as well.
Iowa and Southern Minnesota:
Average land values have dropped 5% to 10% in the past year in Iowa and southern Minnesota. Thomas Schutter, area sales manager for this region, says alternative sale methods have become more common here, particularly for lower-quality farms. While higher-quality farms are still predominantly sold through auctions, there has been an increase in the use of traditional listings and sealed bids for marketing farmland in some areas.
Kansas, Eastern Colorado, Western Missouri:
Values have fallen in some areas of the south-central region, such as in southwest Kansas due to water availability. But other areas are still fetching top dollar for high-quality cropland and recreation properties, according to area sales manager Steve Morgan.
Western Nebraska, Northwest Kansas, Northeastern Colorado:
Cole Nickerson, area sales manager for the western region, says neighborhood demand and land quality are the primary drivers in the western region. Land values have remained high in regions with strong cattle production, high-quality irrigated and productive dryland farms and quality grassland. He adds economic challenges in the corn and soybean markets have made farmland more difficult to sell in areas dominated by row crop production.
Eastern Nebraska and Western Iowa:
Chanda Scheuring, area sales manager for the west-central region, has seen the buyer-pool in this area shrinking. She shares buyers, both local farmers and investors, are still interested in making farm purchases. However, they’ve become more selective with properties and the price they are willing to pay.
Dakotas and Western Minnesota:
The land market in the northern regions is best described as chaotic, according to area sales manager Troy Swee.

“Land values remain very strong in areas where not much land has sold, and the producers had an above-average crop in 2024,” Swee explains. “However, in areas with less investor interest and where several farms have already been sold, land values appear to be down 10% to 15%.”

Your Next Read: New Trends Are Emerging In The Farmland Market

New Trends Are Emerging In The Farmland Market

Fri, 20 Dec 2024 21:34:40 GMT

It’s been an interesting few years for the farmland market, with inflation and interest rates largely driving trends. But this year is different as new trends are emerging in the farmland market, including lower farm income and uncertainty surrounding tariffs and trade , the farm bill and renewable fuels/energy .

“Two years ago, we really focused on interest rates. That was a pretty easy conversation. And then last year we focused on inflation, and frankly, that was a pretty easy conversation too. We knew that things would somehow eventually calm down a bit,” says Bruce Sherrick, professor and director of the TIAA Center for Farmland Research. “This year, we focused a little bit more on income. To be honest, that’s a lot tougher to predict.”

People’s Company 2024 Land Values

(Peoples Company)

Considering the combination of lower commodity prices and farm income, it makes sense that land values have softened in 2024. What might be more surprising, however, is that they haven’t declined more.

“When you look at just commodity prices alone and interest rates alone, I think a lot of folks would have anticipated that land values would probably soften more so than what a lot of the survey data and the USDA numbers are showing,” says Steve Bruere, president of Peoples Company. “So, why aren’t land values declining to the degree that maybe your spreadsheet might show that they would? The are themes such as ecosystem services, natural capital, wind and solar, carbon.”

Iowa State University’s (ISU) recent land value survey found farmland values in the state decreased 3.1%, or $369, to $11,467 per acre, and 75 of Iowa’s 99 counties showed a decrease in land values. Bruere believes the decline of land values in the state might be closer to 10% to 15%, based on transactions he’s seen, and there’s likely still farther to go.

“The markets have probably softened more than what the Iowa state survey would reflect,” he says. “I think everybody is incredibly bullish about where the land markets headed over the long haul, but in the short term, there’s some adjustments happening around commodity prices and interest rates.

This sentiment is echoed by respondents to ISU’s survey, as 58% expect a decline in values over the next year while 80% believe land values will increase over the next five years.

“This long-term confidence aligns with expectations of more stable or slightly rising corn and soybean prices, suggesting that while the short-term outlook may be challenging, the market’s foundation remains strong,” says ISU survey author Rabail Chandio.

A Regional Look

Peoples Company 2024 Returns by Region

(Peoples Company)

Looking at the farmland trends by region reveals a few interesting connections.

“When you start to look at some of the stability of returns, you can start to call out those regions where you have more diversity in crop production. The Pacific Northwest jumps out, whereas in the corn belt, you can see a bit of a tracking along some of those commodity cycles,” says Dave Muth, Peoples Company’s director of capital markets. “In 2025, you can plan on farmland across different regions and different systems needing to be looked at more independently.”

Livestock’s role in a region’s income also becomes clearer.

“In 2024, animals and livestock products exceeded, in terms of receipts, crops for the first time. This is a major change because when commodity prices go down, feed prices for livestock also go down,” Sherrick says. “This is having differential effects in supporting farmland values moving forward again.”

3 Takeaways For The Future
The Peoples Company team gives the following predictions for what to expect in the farmland market moving forward.

Land values are increasing long term, but the next year could be more unpredictable.
Record-breaking sales will likely be a bidding war between neighbors who wanted the land instead of a new trend.
Voluntarily bringing land to market just because a neighbor had a huge sale seems to be over - at least for now.

“I wouldn’t be surprised to see a little bit of a pullback, but I think the pullback will still need to be precipitated by some policy or world event that is not present now,” Sherrick says. “Otherwise, I would expect it to be essentially flat. There’s a lot of folks who would like to own farmland still, so I’m not expecting a huge correction.”

Changes To Expect In The Farmland Market This Fall

Tue, 03 Sep 2024 17:58:52 GMT

The U.S. farmland market is changing, according to Jim Rothermich of Iowa Appraisal. He recently joined the Top Producer podcast to share the ways he’s seeing the transition occur.

“Auctioneers are struggling to get some of it sold,” Rothermich says. “We had 27 no sales [in Iowa] in the first six months of this year. That’s a lot.”

After multiple years of a red-hot land market, the high number of no sales is a new trend to watch.

“Auctioneers are saying the last bid has been 10% to 20% below the reserve,” he says. “If I was to put the last bid of no-sale auctions in my data, I would say the market would be closer to 4% or 5% down from a year ago.”

Rothermich adds the market is down about 6% from its peak in 2022, which he sees as relatively healthy in comparison to current commodity prices. But that downward trend is still troubling some auctioneers.

“Just from visiting with the auctioneers, I know they’re concerned right now,” he says. “They think they’re going to have a fairly active fall selling season, but they’re worried people are going to start pulling back. And I see that happening, going forward.”

Despite the softening overall, he believes high-quality farm ground will still sell for a premium.

“Buyers will still pay up for good ground,” Rothermich says. “I analyzed the top 25 sales from the first six months of last year and this year, and there was essentially no difference. It was maybe less than 1% different.”

Rothermich is still anticipating an active auction season this fall and encourages potential buyers to do their research and stay informed.

“Market conditions are changing. They’re trending down, and there’s going to be some opportunities out there,” he says.

Click here to hear more episodes of the Top Producer podcast .

Your Next Read: Farmland Values in Iowa Fall for the First Time in 5 Years

How To Align Environmental Metrics With Your Asset Management In Farmland

Mon, 20 May 2024 16:40:18 GMT

There’s no fast-forward button in farming to see how your investments pay off. But a recent time lapse playback by Iowa farmer Reid Weiland visually told the year-by-year story of how investing in a field yielded environmental and financial rewards.

“Things happen slow,” he says. “It’s the nature of farming one year to the next, and so it can take a decade for our story to develop.”

In the example above and video below, Weiland and his team identified low yielding areas and addressed fertility; they rebuilt and completed the main waterway in the field and added a second where needed; and they cleared an old building site. Piece by piece, season by season, their investments came to fruition.

Weiland Farms grows millet, corn and non-GMO, food-grade soybeans. Reid Weiland is managing partner/CEO and has been for the past 10 years since his father semi-retired.

The Case To Develop A Field Pedigree

With his leadership, Weiland and the team have developed an approach to manage their farmland (owned and leased) for environmental, productivity, and long-term financial payback. He says the need for this approach escalates as farm land has increased in market value.

“Think about where we’re spending $10,000 to $15,000 an acre today, and you don’t typically know what the fertility is,” he says. “You don’t know what the production history of it is. You don’t know any conservation or regenerative pieces that have gone through it. And we’re spending a million bucks for a tract, and we know very little about it.”

This highlights the opportunity of investing in regenerative practices that build up the land’s quality and performance but also emphasizes the risk of not doing so.

“Imagine because of macro economics, farmland doubled. It’s $30,000 an acre. Well, now we’re spending $2 million. How much more valuable is it to have what I would call a pedigree — a production pedigree, a regenerative pedigree?”

Weiland says such a land pedigree would have 10 years of cropping history with documentation of inputs applied by date and quantity.

“That could easily be worth $1,000 an acre for a $30,000 an acre farm, right?” he says.

Boost Land Value and Stewardship
Weiland Farms has made it a mindset to consider how they are investing back in their land with a two-prong goal: minimize environmental impact while boosting its value. Here are four goals the Iowa farm is focused on: Prevent soil erosion: methods include transitioning to minimal-till or no-till in highly erodible areas as well as installing grassed areas. Manage water quality: for example, explore opportunities for incentive funding to install filter systems that remove nitrates from water. Improve waterways: neglected waterways don’t do their intended job and can cause larger erosion issues. Invest in sustainable farming methods: think about how soil health improves long-term productivity.

Boost Land Value and Stewardship

Weiland Farms has made it a mindset to consider how they are investing back in their land with a two-prong goal: minimize environmental impact while boosting its value.

Here are four goals the Iowa farm is focused on:

Prevent soil erosion: methods include transitioning to minimal-till or no-till in highly erodible areas as well as installing grassed areas.
Manage water quality: for example, explore opportunities for incentive funding to install filter systems that remove nitrates from water.
Improve waterways: neglected waterways don’t do their intended job and can cause larger erosion issues.
Invest in sustainable farming methods: think about how soil health improves long-term productivity.

What Makes Farmland Different

From an investment management standpoint, Weiland says agriculture has fallen into a decades-long malaise with a culture that doesn’t encourage regularly informed management. Said another way, farmland is a unique asset because it doesn’t depreciate or require hands-on management from the owner if an operator is in place.

“If you were to correlate a farmland investment to an investment in an apartment building, they are similar but very different. An apartment building needs to be managed almost daily, the roof may need to be replaced, etc.,” he says. “Just like an apartment building, farmland is a solid asset base that you’re generating a return on. But you may have a landowner who hasn’t talked to a tenant in a couple of years. Who owns something worth a million dollars and doesn’t receive a regular report on it from the person managing it? It sounds ridiculous but some landowners can get lulled into complacency without realizing it.”

Physical Investments

Weiland says the approach is a combination of agronomic practices and physical improvements. A current tool they are using is controlled drainage structures.

“It’s estimated that 20% to 50% of water leaving the farm is leaving the farm unnecessarily; that means we are shipping 20% to 50% more water down the Mississippi River than we really need to,” he says. “In addition, these systems help us get in the field and plant when we need to. So, we are holding water, which we know contains nitrates, when we can and still are able to manage the soil moisture for field work.”

Weiland Farms’ first controlled drainage structure was installed this past year, and there are more installations in the works.

“It’ll take us multiple years to learn about this management tool and how it pays back, but we see the benefits already,” he says.

With multiple metrics, progress is tracked as it’s realized.

—Kristin Leigh Lore, Manager of Climate-Smart Content, Trust In Food, contributed reporting to this story.

3 Trends to Watch in the 2024 Land Market

Tue, 06 Feb 2024 16:22:15 GMT

Will the year ahead bring higher peaks, a flat plateau or dip into a valley for farmland values? Jim Rothermich of Iowa Appraisals shares his insights in how the red-hot land market we’ve seen the past few years is showing signs of cooling off.

“The hyper volume of acres going to auction started happening in mid-2021 and kept going to 2022. As we got into 2023, the first quarter had pretty aggressive numbers going to auction, and then it started slowing down,” he says. “The frequency of $20,000 an acre or more really slowed down in the spring and summer.”

Drought, Interest Rates and No Sale Auctions
As for 2024, Rothermich says the level of drought already occurring in much of the country has potential to impact the volume of land sales.

“[Drought] makes people pull back,” he says. “It seems like with crop insurance we don’t see those valleys as much on a dry year, but we haven’t had a major drought since 1934 or 1936 – so we’ll have to see.”

Another factor to watch continues to be interest rates.

“People call in and say they’re interested in a farm, then talk to their banker and say ‘we’re out’. That’s shrinking the buyer pool, and it’s affecting the market,” Rothermich says. “What I’m hearing from my banker friends is interest rates will eventually go down to 5% to 6%, and that’s going to be the normal. Those 3% to 4% interest rates are a thing of the past.”

He adds there have been several no sales at auction recently, which could impact the market as well.

“We’re going to continue to see some records set in some counties, and we’re going to continue to see sales. But I think the auction companies are going to be more selective in what they take to auction because of the chance of a no sale,” Rothermich says. “They’re going to do more traditional listings. So, I think the volume is probably going to go back to normal.”

Cash Rents Predict Strength in 2024 Land Values
When it comes to cash rents, Rothermich says values remain strong despite lower commodity prices.

“Some of these recent cash rent auctions, there’s just no weakness in it at all,” he says. “A lot of them are three-year terms, so it seems like those tenants are forecasting the next three years to be pretty decent.”

This is a trend he predicts will help keep the overall land market steady in the year ahead.

“I see the market gradually cooling off in 2024,” he says. “It’s not going to fall out of bed because these rents are too strong. I think it’s just going to slowly settle down and go back to normal.”

To hear more from Rothermich, listen to this episode of the Top Producer podcast.

Farmland Values Are Holding Up, But There Are Hints of a Reset At a New Level

Farmland Values Remain Strong, Expected To Stabilize In 2024

Farmland Values Are Holding Up, But There Are Hints of a Reset At a New Level

Thu, 01 Feb 2024 23:48:17 GMT

Eye-popping land sales continue to take the farmland market by storm. From the $34,800 per acre land sale in Missouri that smashed records last fall, to farmland in Sioux County, Iowa, selling for more than $22,000 per acre to start the year, it’s proof the strength in the farmland market hasn’t fizzled out yet.

“The key point, without a doubt, is resiliency,” says Paul Schadegg, senior vice president of Real Estate at Farmers National Company (FNC).

A new report from the company shows even with declining commodity prices and elevated interest rates, land values are higher than expected.

“We really haven’t seen any decreases to speak of, and there are still some really strong sales out there in the country,” Schadegg says.

“It is just remarkable how stable these market conditions have been,” says Jim Rothermich, vice president of agricultural appraisals for Iowa Appraisal. “Based on my auction data, farmland values are down 1% from 2022 to 2023, and I think it’s amazing we’re seeing it hold up that well.”

Farmers in the Driver’s Seat
The farmland market in Iowa remains the strongest, but both Rothermich and Schadegg say there are other states with impressive sales.

“Illinois and Indiana have picked up a little steam — a lot of the sales are in the $20,000-plus range,” Schadegg says.

While resilient farmland prices were the theme in 2023, Rothermich recently uncovered one change in the market.

“One thing I have noticed is the number of price reductions on the listings of these companies. I haven’t seen that before,” Rothermich says. “It’s a sign the market is being affected by high interest rates.”

He’s also seen an uptick in no sales in auction, yet farmers are still in the driver’s seat in most farmland sales.

“Over the past several years, when this land market really took off, the primary pool of buyers have been operating farmers, and they continue to be the most successful buyer of land,” Schadegg says.

A Potential Reset
Now the question is: Just how much of a correction could the farmland market see in 2024?

“If we look at the past 25 years, we’ve seen some run-up in land values, and then it resets at a new normal,” Schadegg says. “I think over the next 12 to 24 months, we’re probably going to see land values reset at a new level.”

“The last time we had a run-up was in 2013/14 when values went down 20% to 25%. It just doesn’t seem like it’s going to do that this time,” Rothermich says, who instead thinks the farmland market could be setting up for a correction in the single digits.

Mike Walsten of Pro Farmer’s LandOwner newsletter says the best-case scenario for 2024 is for prices to hold steady for better-quality ground.

“The more likely case, in my opinion, is a 5% decrease,” Walsten says. “I look for continued weakness going into 2025 to 2027, if things do not change radically. Values could correct 10% to 15% eventually. If energy prices go crazy again, a 20% decline is likely, but I don’t see prices correcting any more than that because I don’t see a rush of panic farm sales hitting the market and overwhelming demand.”

Walsten says farmers, in general, have manageable leverage in their recent purchases, and lenders aren’t willing to let farmers get overleveraged on land buys, which will constrain the number of farms that are moving to the market and help keep supply and demand in balance.

Important Differences Between Today and the 1980s Ag Economy

Wed, 01 Nov 2023 18:07:57 GMT

Indiana ag lender Joe Kessie graduated from Purdue University in 1983 with a degree in ag finance – during the height of the 1980s farm crisis.

“I think only about 25% of the graduates in the ag school had jobs at the time of graduation,” he says.

Though it was a tough time to be starting out in the industry, Kessie (who is now retired) is grateful to have experienced so much early on in his career.

“I always tell people I was fortunate to start when I did because I got to see everything that could go wrong in banking and ag finance during that farm crisis,” he says. “It was a little easier to be objective because I hadn’t made those original loans and was working with the clients to get through that.”

He was also able to help customers make the best of their situations.

“In the late ‘80s, early ‘90s, there were tremendous opportunities to take advantage of. Ground was down to $1,000 an acre or less in our area,” Kessie says. “I had some operations that were making adequate money even though their net worth still might have been going down with deflation. I helped them take advantage of some of those opportunities and I formed long term relationships.”

Insights on What’s to Come
Though inflation is currently high, Kessie doesn’t expect a repeat of what he experienced in his early career for three main reasons.

“Back in the ‘70s or early ‘80s, all the farm rates were all variable. When rates skyrocketed, basically all the debt on the balance sheet went up,” he says. “Today, about any kind of term debt is fixed at pretty attractive rates. The higher rates today are affecting operating and if you make a new purchase, but the other debt on the balance sheet is not affected.”

He also shares the overall farm balance sheet and management level is in better shape than it has previously been.

“The farm balance sheet was pretty leveraged in the ‘70s versus now it’s not,” Kessie says. “Overall, the management level is definitely better today than it would have been in the 70s. A lot of the inefficient operations, unfortunately, didn’t make it.”

Investment funds are another reason the state of the current ag economy differs from the 1980s.

“There’s a lot of farm cash buyers but then there’s also a strong interest in investors and investor funds,” Kessie says. “None of that was there in the ‘80s to support the market. The sales we’ve seen in real estate this year continues to go up, and demand is very strong.”

To hear more about Kessie’s reflections and expectations, check out this episode of the Top Producer podcast.

Cash Rents Are Up for 2023, But Will 2024 Be Better?

Wed, 11 Oct 2023 18:51:03 GMT

The USDA National Agricultural Statistics Service (NASS) recently released data showing that cash rents for cropland have increased nationwide in 2023.

Between 2022 and 2023, the national average for cropland cash rents grew from $148 to $155 per acre – a 4.7% increase. The lowest reported average was in Montana at $35 per acre, compared to the highest in Arizona at $347.

Within the corn belt , values increased 5.8% from $223 to $236.

Farmdoc Daily from the University of Illinois did a state-specific deep dive in the data to show how values have changed over time, as well as how different values can be across states.

According to the Purdue Farmland Value and Cash Rent Survey, these exceptionally high rates broke records in Indiana – exceeding the previous highs set in 2013, 2014, and 2021, respectively, for top, average and poor-quality land.

There may, however, be a shift soon.

Purdue’s survey showed that though Indiana’s values are at an all-time high, the rate of increase has slowed in comparison to 2022. Survey respondents also expect modest declines in the remainder of 2023.

“2020, 2021 and 2022 were very good years from a profitability and net return to land standpoint. That created the upward pressure in cash rent that we’ve seen the past two or three years,” says Michael Langemeier, associate director of the Purdue Center for Commercial Agriculture, in a recent podcast . “Looking ahead, we’re projecting a net return to land in 2023 to be considerably lower than it was the last three years.”

The Illinois Society of Professional Farm Managers and Rural Appraisers is also expecting slight decrease in cash rent numbers for 2024.

The society shares that while cropland cash rent values do tend to follow trends in farm returns, there is a 1 to 2-year lag.

The Farmdoc graph below shows the farm return trends for central Illinois.

With the USDA reporting a net farm income decrease in 2023, the society predicts cash rent values to follow next year.

“How much downward pressure will depend on what the corn price is this fall,” Langemeier says. “You’re looking at a situation where you could easily see a 2 to 3% decline in cash rent in 2024 compared to 2023.”

Survey Shows Land Values Leveling Off

Thu, 05 Oct 2023 13:01:35 GMT

The Realtors Land Institute - Iowa Chapter has announced the results of it’s September 2023 Land Trends and Values Survey.

This survey is conducted each year in March and September. Participants in the survey are specialists in farmland and share their opinions about the current status of the Iowa farmland market.

For the September survey, they were asked to estimate the average value of bare, unimproved land with a sale price on a cash basis as of Sept. 1, 2023. Pasture and timberland values were also requested as supplemental information.

The results of the September survey showed a minor decrease of -0.2% on a statewide average for the March 2023 to September 2023 time period. This is following the September 2022 to March 2023 time period that showed a 0.8% increase, giving a year-over-year increase of 0.6% for the State of Iowa.

The survey results indicate that after double-digit increases through much of 2021 and 2022, the 2023 land market has confirmed its move toward leveling off. The report authors note, however, the continuing struggle between rising interest rates trying to pull the market lower while positive net farm incomes allow the market to remain supported at today’s values.

The survey results by crop reporting district range from a 2.9% decrease in the northwest district to a 1.3% increase in the south central district. Timber and pasture acres showed slight gains with a 1.1% increase in timberland values and a 1.4% increase in pastureland values across the state.

What Makes 2023 Land Sales Different Than 2022 or 2021?

Thu, 14 Sep 2023 16:37:54 GMT

On the heels of the September WASDE report, Davis Michaelson welcomed Doug Hensley from Hertz Real Estate on AgriTalk.

With yields and crop prices top of mind, Michaelson took the opportunity to ask Hensley: How much do crop prices actually impact the decision-making process of farmland buyers?

“Crop prices are one of the primary impacts when farmers are buying and/or selling land, but predominantly buying,” Hensley says. “The thing people often get caught up in is looking at any particular day in any particular week and saying, ‘Oh, this doesn’t pencil out a profit for me in today’s market.’ But when you think back over the last nine to 12 months, there have been opportunities to forward contract and hedge the 2023 crop at pretty profitable levels, though maybe not as profitable as it was a year ago. It’s important to look at production over a period of years to tell a bigger story.”

With that in mind, historical data on a field ranks up there in importance when buying land. “Get a hold of the 10-year APH data,” Hensley encourages.

How 2023 Stacks Up

Three-quarters of the way through 2023, Hensley says it’s been a steady year and actually a bit busier than anticipated after the record pace of land sales in 2021 and 2022 because of record profitability.

From 2015 through 2020, he says there were folks interested in selling land, but they sat on it because of the weak market. When the market turned in 2021, and especially in 2022, he saw a lot of people hit the button to go to auction.

“When you have a strong market over a 24-to-30-month period, at some point, it’s going to slow down,” Hensley says. “I thought that was going to happen in 2023, and it has slowed some, but not quite as much as I thought. In spite of lower grain prices and higher interest rates, we’re still seeing the market hold itself together pretty well.”

The depth in the market, from a buyer’s perspective, is not as great as it was a year ago, he says, except for top-quality farms, in terms of soil quality and drainage.

A year ago, when farmland went to auction, there might have been five or six buyers ready to line up and compete for it, Hensley says. Today, there’s still competition, but there might be two or three buyers who are really competing until the end.

When there are fewer buyers, land is less likely to sell for a record price. A year ago, almost every sale was a new record for the county or the area, but that hasn’t been the case across the Midwest this year.

“It was almost a powder keg last fall because of good yields and good prices. People were really flush,” Hensley says. “In today’s market, I think there’s still a ton of cash out there, but given a change in the economy, people are starting to be a little more protective of their liquidity.”

It’s not to say they won’t bid and buy, he adds, because they will. On Sept. 12, Hertz Real Estate had almost a $21,000 per acre sale, and the same was true almost two weeks ago.

From his standpoint, it’s important to be discerning as to which farms make the most sense to take to auction versus which ones to offer privately to the market, and how to go about it.

“This is a more interesting time in the land business because you get to be a broker and you’re solving problems and helping people navigate through a shifting market.”

New Land Analysis Tool Puts a Twist on Plat Book Concept

Mon, 17 Oct 2022 20:38:20 GMT

Putting a modern-day spin on the trusty plat book, AcreTrader is launching Acres , a land analysis platform that provides access to comprehensive data for 150 million U.S. parcels, local insights and comparable sales.

As the company describes, Acres’ in-house team aggregates and analyzes public and private data into one easy-to-use tool. The platform provides users with simple and intuitive analysis of more than 10 layers of data on a given parcel of land, such as public owner records, soil and crop information, historical satellite imagery, vegetation indexes, water use and comparable sales.

“Technology has provided numerous tools to make smarter portfolio management decisions and more accurate asset valuations. However, until now, these tools have largely been unavailable across the broader land industry and asset class,” says Justin Ge, a former analyst, trader and data scientist who now leads the Acres team. “Through Acres, landowners and land professionals can leverage a substantial amount of data and land value insights to make the most informed buying or selling decisions and to improve the value of their land.”

Users can “claim their land” to create custom maps (with drawing tools, icons and notes), upload photos and share reports. The Acres platform also includes the ability to browse more than 12 million land sales to help better understand the value of farmland.

Acres offers pricing plans ranging from a free account for landowners to premium and enterprise levels for brokers, land professionals and land finance companies. The platform is available for desktop and mobile.

For Sale: Farmers and Banks Jump on Available Land

Fri, 24 Sep 2021 14:47:32 GMT

In August, 80 acres of farmland sold for a record $22,600 per acre in Grundy County, Iowa. Earlier the same month, another parcel of farmland in northwest Iowa sold for $19,000 an acre.

To shed light on the record-breaking farmland prices, Doug Hensley, president of Hertz Farm Management, joined Davis Michaelsen on AgriTalk.

“It seems like more people are stepping up to raise their hand and say they’re interested in a farm. That’s a little different than what we experience on a year-to-year basis.”

Federal Reserve reports from Chicago, Kansas City and other districts show current lending availability greatly exceeds previous years totals, according to Hensley. Therefore, both banks and farmers are jumping on any available opportunity.

“[Farmers] were able to make really good money on their 2020 crop, and obviously forward contracts in 2021 look good. Banks have a ton of money available to lend right now,” Hensley says. “When you look at forward cash flow, more borrowers are being reflected right now as very qualified borrowers. Then you add on top of that, there’s a lot of cash still out in the countryside.”

Farmers have a track-record of reinvesting funds inwardly. Today’s markets make those reinvestments particularly evident.

“There’s one thing I know about farmers, and just people in agriculture, when profit is made, people have a tendency to reinvest in their business,” Hensley explains. “That comes in the form of buying either additional land or upgrading equipment. I think we’re seeing a lot of that right now, but we’re seeing it a lot with cash.”

Low interest rates play a big role in today’s bidding game, according to Hensley.

“For people who want to borrow a little money, interest rates are phenomenally low,” says Hensley. “You can borrow on a 20- or 25-year amortization with a 10-year lock and get between 3.5% and 4% easy right now.”

According to Hensley, the increase in farmland prices this year compared with previous years has many questioning their next move.

“I think some people may have inherited property over the last five or six years and the market hasn’t been on fire. People who were maybe sitting on the sidelines thinking they’d wait for a better market are saying now is the time,” he explains.

With low interest rates and high sale prices, speculation that an increase in farmland for sale will drive down prices is a cause for concern. Nevertheless, Hensley says to put those worries on the backburner for now.

“We believe that can be a concern in the longer term if the pace of sales again increases. If it happens month after month after month, will we get there? Potentially? But right now, we’re not there yet.”

Listen to the full interview with Doug Hensley here.