After years of growth, ag land values appear to be softening across parts of the U.S. It is a trend some rural bankers expect to continue thanks to the weakening farm economy.
One Iowa State University economist says that land values tend to decline a year or two after farm incomes do. Last year, farmers saw income declines of 20%, with 4.5% expected this year.
Chad Hart says that next year, farmland prices could decline 5%. Hart says the longer the downturn lasts, the steeper the drop will be.
However, one K-State ag economist says that might not be the case.
Robin Reid says that she believes farmland values will slow down, but not necessarily decrease in the short term.
USDA forecasts farmland prices to be up 8% year-over-year. While that is still an increase, it’s quite small compared to the 18-20% rises recently seen.
Reid says that farmers are still in the driver’s seat and the direction of land values in the coming months and years will heavily rely on the profitability of row crops.
If things do not improve in the next year or so, Reid says that land values and cash rental prices will definitely be impacted.
