Farmland Values Remain Resilient

December 2, 2020

Written By Adam Buckallew

In spite of tight profit margins and challenging market conditions, farmland values are up. The U.S. Department of Agriculture’s 2019 Land Values report revealed the average value of agricultural cropland was $4,100 per acre in 2019, up $50 per acre or 1.2% from 2018. The average value of pastureland was a record-high $1,400 per acre in 2019, up $30 per acre or 2.2% from the prior year. The average value of all agricultural land was $3,160 per acre in 2019, up $60 per acre or 1.9% from 2018.

Recent land value surveys conducted by university researchers in Iowa and Missouri confirmed farmland valuations are, at least for the moment, on the rise. The Iowa State University Farmland Value Survey showed agricultural land in the Hawkeye State had increased 2.3% over the past year, and a survey conducted by University of Missouri Extension showed non-irrigated cropland across the state increased about 4% in value or $204 per acre from last year.

Strong demand, low interest rates and limited sale inventories have resulted in buoyant farmland prices that have provided farmers and ranchers with a measure of stability.

“Demand remains strong and rental rates (have) decreased little,” says Ray Massey, an ag economist with University of Missouri Extension.

Massey points to low interest rates and low rates of return on “safe” investments such as certificates of deposit that have caused people to put their money in land.

Wendong Zhang, an extension economist with Iowa State University, says the market for Iowa farmland appears likely to remain stable in the year ahead, but “interest rate changes and progress in trade talks will have significant implications on commodity prices, farm incomes, and farmland values.”