Optimism about farmland prices is ticking up for farmers. That’s according to the Purdue/CME Group November 2017 Ag Economy Barometer by Purdue University’s Center for Commercial Agriculture. The monthly survey polls 400 U.S. producers to gauge the health of the ag economy.
“A record-low number of producers—only 17%—indicated they expect lower farmland values in the year ahead,” says James Mintert, director of Purdue University’s Center for Commercial Agriculture. “We also had a modest uptick of farmers expecting higher farmland values. People are becoming more optimistic, or at least less pessimistic, about what’s taking place in terms of farmland values.”
For the first time in the history of the survey (data collection began in October 2015), more producers expect farmland values to increase in the upcoming year than decline.
The survey also asked farmers if they expected farmland values to be “about the same” in the next 12 months. In November, the percentage of producers expecting no change reached 62%. That’s nine percentage points above the previous peak of 53%, set in February 2017.
Longer-term expectations for farmland values were also measured. Nearly half—46%—of producers expect farmland values to be higher in five years. Only 9% expect values to be lower. Of note, the percentage of respondents expecting higher farmland values in five years was more than double the percentage of producers expecting higher values in 12 months.
Even with continued tight profit margins, the survey points to strong underlying support for farmland values among producers.
Firm Land Rents. In the October 2017 Ag Economy Barometer, producers were asked about farmland rental rates. The clear majority, 80%, expected their rent levels to be unchanged in 2018 compared to 2017. Responses from the remaining 20% of respondents were split equally between those who expected rental expenses to be higher (10%) and lower (10%).
Producers were also asked to project their total farm expenses in 2018 compared to the previous year. The majority, 62%, expect no change in their expenses in the upcoming year. However, 31% of respondents expect their expenses to increase in 2018 compared to 2017.