High-interest costs could affect demand for farmland

High-interest rates could take a toll on farmland demand this year.

The Federal Reserve Bank of Kansas City says the higher interest rates, coupled with moderate ag commodity prices, could cut potential returns and dampen demand for farm land.

For the first time since 2001, interest costs in 2023 on new farm land loans exceeded the recent average annual appreciation in land values. From 2002 to 2022, growth in ag real estate values was well above the cost of financing, which supported the demand for farm land.

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