Farmland Market Shows Resilience Amid Emerging Trends in 2024
Source: DairyNews.today
The U.S. farmland market, long influenced by inflation and interest rate fluctuations, is facing new dynamics in 2024. Lower farm income, trade uncertainties, and evolving priorities like renewable energy are shaping the landscape, according to recent data from Iowa State University (ISU) and Peoples Company.
A Shift from Interest Rates to Farm Income
“In previous years, the conversation centered on interest rates and inflation. This year, income is the focus, and that’s much harder to predict,” said Bruce Sherrick, director of the TIAA Center for Farmland Research. Declining commodity prices and reduced farm income are key contributors to softer land values.
ISU’s latest land value survey shows a modest 3.1% drop in farmland values in Iowa, with the average per-acre price falling by $369 to $11,467. Seventy-five of Iowa’s 99 counties reported decreases. However, Steve Bruere, president of Peoples Company, suggests the actual decline may be closer to 10%-15%, based on transaction data, with more adjustments likely ahead.
Resilience Despite Downward Pressure
Surprisingly, land values have not fallen as sharply as some anticipated. “Given commodity prices and interest rates, many expected a steeper decline,” said Bruere. He attributes the relative stability to emerging factors such as ecosystem services, wind and solar energy, and carbon markets.
Survey respondents largely echo this sentiment: 58% expect values to decline in the next year, but 80% foresee growth over the next five years. This optimism aligns with stable or slightly rising corn and soybean price expectations, noted ISU survey author Rabail Chandio.
Regional Dynamics and Livestock Impact
Farmland trends vary by region, with diversification playing a stabilizing role. “The Pacific Northwest stands out for its crop diversity, whereas the Corn Belt closely tracks commodity cycles,” said Dave Muth, Peoples Company’s director of capital markets.
Livestock has emerged as a critical factor in supporting farmland values. “In 2024, livestock receipts surpassed crop receipts for the first time, cushioning the impact of declining crop prices,” noted Sherrick.
Outlook for the Farmland Market
Despite current challenges, experts predict long-term growth in farmland values, tempered by short-term unpredictability. Record-breaking sales may continue, but voluntary sales driven by neighboring transactions are diminishing.
“I don’t expect a significant correction unless triggered by a major policy shift or global event,” said Sherrick. “For now, the market appears stable, with strong interest in farmland ownership.”
Key Takeaways
Long-Term Growth: While short-term volatility persists, farmland values are expected to increase over the next five years.
Localized Trends: Regional differences will require more granular analysis of farmland markets moving forward.
Livestock’s Role: Livestock-related income is playing a growing role in stabilizing land values.
The U.S. farmland market remains a cornerstone of agricultural investment, even as it navigates evolving challenges and opportunities.
“In previous years, the conversation centered on interest rates and inflation. This year, income is the focus, and that’s much harder to predict,” said Bruce Sherrick, director of the TIAA Center for Farmland Research. Declining commodity prices and reduced farm income are key contributors to softer land values.
ISU’s latest land value survey shows a modest 3.1% drop in farmland values in Iowa, with the average per-acre price falling by $369 to $11,467. Seventy-five of Iowa’s 99 counties reported decreases. However, Steve Bruere, president of Peoples Company, suggests the actual decline may be closer to 10%-15%, based on transaction data, with more adjustments likely ahead.
Resilience Despite Downward Pressure
Surprisingly, land values have not fallen as sharply as some anticipated. “Given commodity prices and interest rates, many expected a steeper decline,” said Bruere. He attributes the relative stability to emerging factors such as ecosystem services, wind and solar energy, and carbon markets.
Survey respondents largely echo this sentiment: 58% expect values to decline in the next year, but 80% foresee growth over the next five years. This optimism aligns with stable or slightly rising corn and soybean price expectations, noted ISU survey author Rabail Chandio.
Regional Dynamics and Livestock Impact
Farmland trends vary by region, with diversification playing a stabilizing role. “The Pacific Northwest stands out for its crop diversity, whereas the Corn Belt closely tracks commodity cycles,” said Dave Muth, Peoples Company’s director of capital markets.
Livestock has emerged as a critical factor in supporting farmland values. “In 2024, livestock receipts surpassed crop receipts for the first time, cushioning the impact of declining crop prices,” noted Sherrick.
Outlook for the Farmland Market
Despite current challenges, experts predict long-term growth in farmland values, tempered by short-term unpredictability. Record-breaking sales may continue, but voluntary sales driven by neighboring transactions are diminishing.
“I don’t expect a significant correction unless triggered by a major policy shift or global event,” said Sherrick. “For now, the market appears stable, with strong interest in farmland ownership.”
Key Takeaways
Long-Term Growth: While short-term volatility persists, farmland values are expected to increase over the next five years.
Localized Trends: Regional differences will require more granular analysis of farmland markets moving forward.
Livestock’s Role: Livestock-related income is playing a growing role in stabilizing land values.
The U.S. farmland market remains a cornerstone of agricultural investment, even as it navigates evolving challenges and opportunities.
