Warning for Producers: Probably will need to borrow to buy farmland in 2024
Farmland values held strong this year with some big money dished out for acreage. However, with interest rates holding at higher levels, and less profitability expected, farmland specialists warn more producers will need to borrow in order to buy ag land.
“My take is in a lot of parts in the Corn Belt, it takes $3 million to buy a quarter section, and how many $3 million are there lying around in that neighborhood? So, I think there’s going to be in the next round of land buying coming up a little more borrowing of funds, and so that becomes more expensive, and that makes a difference because you’re gonna have to support that payment from other income from the farm. So, higher interest rates, the cap rate expectation, or the return on that farmland that’s going to change, I think,” said Randy Dickhut.
Dickhut adds the cost of farming will be a big factor in the market next year. He also points to input costs, farm income, and commodity prices.