With higher interest rates coupled with lower commodity prices, many thought land values in 2023 would weaken, but the chair of the Farmland Values Conference Project says that numbers show otherwise.
“According to the data that we poured over, Class A land on average in Illinois went up another 6 percent in 2023, Class B 7 percent, Class C and D were in that 14 percent, and even recreational land was up I think 7 percent. So, and so we’re all kind of joking that we’re just going to run back the same prediction because there is reason to think that that’s what should happen, but we haven’t started it yet, according to what we just learned,” Luke Worrell explains.
One big change in last year’s data was the number of transactions. Worrell says that there was a considerable decline compared to 2021 and 2022.
Despite the increase in farmland prices, the number of farms lost continues to grow.
According to the latest agricultural census, the number of farms in the U.S. in 2022 dropped 7 percent since 2017, representing a 141,000 farm drop.
American Farm Bureau Economist Danny Munch attributes this decline to challenges such as labor access, environmental regulations, adverse weather conditions, and higher production costs.
Those higher interest rates and production costs could lead to even more farm loss in California.
It is estimated that 1 million acres of farmland will be allowed by the year 2040 in The Golden State.
Just within the past year, the California Chapter of the American Society of Farm Managers and Rural Appraisers recorded a downward trend in ag real estate, along with lower irrigation water availability.
These factors have led to several bankruptcy filings as well as declines in almond and wine grape production.
