Farmland values are entering 2025 with a cloud of uncertainty after years of rapid price increases and pullback in late 2024.
A farmland economics professor at the University of Illinois says that many are wondering about the market’s next move. He highlights the key challenges that could move the market including inflation, evolving trade policies, renewable energy priorities, and the absence of a new Farm Bill.
According to Dr. Bruce Sherrick, “We have inflation that appears to be higher for longer, according to both the Fed and the stance of financial markets. People recognize that the incoming administration will have changing priorities on renewable fuels or decarbonizing the energy complex, perhaps, and questions around trade policy and tariffs, in particular. At the same time, we didn’t get a Farm Bill written, but we got an extension, and on top of the extension, we seem to have become comfortable with ad hoc payments again. So, we have another disaster bill or another payment bill in the works. And so, I think this understanding of income used to be based on what you grew in the market, so you could somewhat predict. Now, we don’t know if income is dependent on a trade issue, and extra payment or disaster, or a change in the subsidy rate on crop insurance, or any number of things that we used to not have as high on the list of potential problems.”
He adds that regional dynamics also play a role, where some regions might be hotter. For example, the Corn Belt trends in row crops, but states like California face unique challenges tied to specialty crops.
