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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, according to 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,” Schadegg said 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 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 non-irrigated) 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.
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.”
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.
EDITOR’S TAKE:
We have consistently reported throughout the year on what agricultural land values are doing. This past year saw several new records established for farmland, especially high-quality land. According to this article 2024 looks to be another very good year for ag land values. This is important to note because land is the major asset on the balance sheet of most farmers/ranchers. When the land values escalate, as they have in recent years, it simply means the net worth of those farmers/ranchers is going up as well. That, in turn, translates into credit worthiness when you are selling or leasing a truck to those folks. Be sure to watch for CADFI coming soon. It will offer pre-qualification of farmers/ranchers and very flexible payment terms that line up with their cash flow.
