If it seems everyone you know is showing up to local ag land auctions, it should come as no surprise.
A new report from Farmers National Company (FNC), one of the largest farm and ranch management and real estate companies in the country, said there are more potential buyers than sellers in the market.
That lack of balance between demand and supply is helping land markets remain relatively stable.
Across the industry, land listings are down, on average, 25% from the active and accelerating value market experienced between 2020 and 2023, according to the FNC.
"The principle of supply and demand fits into the current land market, as many landowners understand the long-term appreciation of land value while providing an annual return on that investment."
FNC said that this past fall alone, it marketed $223 million of land value for clients across the Midwest in the last three months of 2024. The company said it conducted 123 sales in the fall months of 2024 through public auction. Real estate activity moving into the first quarter of 2025 "remains brisk," according to FNC, with an above-average level of auctions and traditional listings being negotiated.
"Despite the pressures created by lower net-farm income, declining commodity markets, higher interest rates and increased input costs, land values have remained quite stable across the Midwest," FNC recently said in a news release.
"While most university and industry land value reports published at year's end reflect a flat or slight downward trend compared to production expenses, the stability in those values reveals the resiliency of the land market and its ability to maintain the high values set over the past five years."
Paul Schadegg, senior vice president of real estate operations at Farmers National, said farm operators continue to be the primary buyers of ag land and will continue to be through 2025.
"There are many factors for buyer motivation, but much of it can be explained by mindset translating to demand," Schadegg said in a news release.
"Farm operators continue to be the primary buyers of ag land. The mindset or motivation of farm operators 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."
EDITOR’S TAKE:
As we often point out, land is a farmer’s/rancher’s largest form of equity. It is the solid foundation of their balance sheet. It provides the borrowing power they require to obtain capital for their operation. So, the fact that land values are holding steady or continuing to rise is critical to their financial well-being. The downside, when outside investors bid the prices up and successfully purchase the land, they will likely control the land for generations to come. The counter to that is farmers/ranchers often place a higher value on a piece of property if it is connected to their current operation or is viewed as critical to their expansion plans. Either way, farmland demand and prices will remain strong for the foreseeable future. That means farmers/ranchers will be very creditworthy now and well into the future. Make certain your inventory is on AgTruckTrader.com® and be sure to use CADFI to shape their payments to their operation’s income stream.
