Farmers and investors seeking to expand are paying more for agricultural land in the Midwest.
The value of good cropland in Corn Belt states like Iowa and Indiana has increased about 10% since last fall, according to Randy Dickhut, the senior vice president of real estate operations for Farmers National Co.
Increased commodity prices, fewer trade stressors and historic amounts of government aid have contributed to higher land values, he says. The real estate company reports that it sold 59% more acres compared to the same period last year and the dollar volume of its land sales was up 67% compared to the three-year average.
“There wasn't any increase in the amount for sale,” Dickhut says.“It's just kind of been on the lower side. So the lower supply, good demand in the market responds with higher prices.”
Dickhut says farmland has always been difficult to buy, and established farmers are more likely to purchase the land.
“Farms don't come up for sale very often once in three and four generations, a lot of times, so they try to buy what they can,” he says.
Dickhut says land values will continue to remain steady as long as long as crop prices continue to be high. But Roger Sahs, an agricultural economics extension specialist at Oklahoma State University, says because Oklahoma is mainly a beef-producing state, land values for pasture land tend to move differently than in the Corn Belt. He says land values have been consistent despite some ups and downs over the years.
“While we experienced some of that volatility down in Oklahoma, we just don't experience the same magnitude of those swings,” Sahs says.
Correction: Some numbers were updated in this story to reflect that they applied to Farmland National Co. and not the market as a whole.