More Pessimistic Views on Farmland Values in Short-, Long-Term

May 3, 2018 11:24 AM
 
 

Grain prices have struggled the last four years, and that negative profitability has weighed on farmland values.

The April Purdue/CME Group Ag Economy Barometer showed that the perspective of farmland values drifted lower compared to the February reading. 

The April survey dropped four points to 18 percent of producers expecting farmland values to increase over the next 12 months.

Fewer producers are expecting an increase in farmland values by 2024 in April compared to February, falling from 53 percent to 46 percent.

“We did lose optimism with respect to farm land values into the future,” said Jim Mintert, director of the Center for Commercial Agriculture at Purdue University.

Each month, a survey of 400 producers from across the nation are surveyed on a variety of topics in regards to current and future sentiment of the agricultural economy.

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Comments

 
Spell Check

Bob
cooper, IA
5/4/2018 08:44 AM
 

  every year there is farmland lost to development. That will keep prices up as there is less available. Second, farming is a cash poor asset rich occupation. You do it for generations so the cost is spread out. It takes a family income to keep a family farm going. You work the margins, do your own work, keep old vehicles etc. My family started from scratch and threw everything we had in the pot to keep from losing the farm in the first 10 years. Pretty solid after 30. We kept adding land as we could, some is worth 3 times what we paid, some is worth 30 times what we paid. Figured out the ideal amount of cattle we could handle with a little buffer. We could have made more money by selling some timber, hunting leases etc but decided to keep it more simple and rely on more on sweat. And a 1984 4x4.

 
 
Craig
Kearney, NE
5/4/2018 06:33 AM
 

  High land prices are NOT good for the farm economy. Commodity production is, and always will be, a low margin business. As such, it is long term destructive to bid up the prices of the inputs that go into the production of those low margin commodities. $3.75 corn does not support $10,000/acre land, let alone $2500/acre land. Never has, and never will. The same for calf prices and pasture land prices. The only reason that land prices have not collapsed is ultra low interest rates that allow for "extend and pretend" financing.

 
 
C.K
bad axe, MI
5/4/2018 09:58 AM
 

  Bob You have to realize when Nixon went off the gold standard in 1973 most land was selling for $200.00 to $300.00. From 1973 to 1980 land went up in some cases 20 times in value, because of the printing if 5 trillion in credit market debt in that time period. Now the credit market debt is 70 trillion that's why land is some cases is $15,000.00 +. But where the problem lies is there running the whole US economy at a loss , if it wasn't at a loss the credit market debt wouldn't 70 trillion. The problem lies in the 93.5 million workers in the US gross about 4.5 trillion in wages in this country a year, the interest at 6% on the credit market debt of 70 trillion in this country is 4.2 trillion . If your gross receipt's on your farm were equal to you interest service for the year how would you survive. You can't that's why were in a trade war , nobody wants are money and I don't blame them.

 
 

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