American Society of Farm Managers and Rural Appraisers

Farmland Value Check: Midwest Class A Ground Sees Pullback, Water Security Redefines California’s Market

Mon, 04 May 2026 03:08:14 GMT

New data assembled by Realtors Land Institute (RLI), the National Association of Realtors Research Group and Acres, highlights fundamental trends driving the land market today. But this year’s Land Market Survey, which was augmented by research conducted by Acres, unveils two trends in farmland regarding quality and productivity ratings as well as other trends important in the business management of farmland.

First, Overall Land Trends

In addressing widespread concerns about a potential U.S. recession, Dr. Lawrence Yun Chief Economist and SVP of Research, National Association of Realtors emphasized that, despite recent oil price shocks and persistently low consumer sentiment, the U.S. economy is not on the brink of recession.

The survey details multiple industries and sectors in land use and values, and for 2025, In terms of price growth, the ranch category led with a 2.2% increase in dollars per acre, outperforming other land types. Industrial and recreational land also saw solid gains of 1.9% each, while other categories experienced moderate increases. Notably, Commercial Real Estate Data Analyst, Oleh Sorokin anticipates that while land sales will strengthen in 2026, the pace of price growth is expected to slow, with projected increases in the ranch category dropping to 0.9% per acre.

How Are Farmland Values Performing Differently?

The presenters highlight the energy price correlation as Farmland values and operational balance sheets are heavily tied to energy prices, as oil and gas drive both fuel costs and fertilizer prices.

“Tariffs are one that it’s kind of dwarfed now by the energy situation, but tariffs were a pretty big impact last year,” says Aaron Shew, chief technology officer at Acres.

With fuel input prices and fertilizer input prices highly driven by energy prices, those effects are being monitored closely both in terms of price hikes but also duration of elevated prices.

He continues, “Some of the energy challenges that we’re undergoing with the war in Iran and the blockade, Straits of Hormuz, I think that has the potential, maybe less in the broader real estate market, but for farmland specifically, that could have a pretty large impact, depending on how it resolves, how quickly that happens.”

What Are The High Interest Trends?

Shew’s research reveals two eye-catching farmland value takeaways.

1. Midwest Market “Pullback": Class A farmland in the Midwest is seeing a “mature” pullback of about 10% from the 2021–2022 peaks, while Class B ground remains slightly more resilient.

(Acres.com)

First Shew notes, 2021 and 2022 saw 1.5x to 2x the average number of land transactions. The highest value per acres sales during that time earned a lot of attention. What he refers to as “hype.”

“Particularly in Iowa and Illinois, where farmers were buying farms for $25,000 or $30,000 per acre. you have these outlier transactions. It’s very, very few, but they catch a lot of attention and that kind of pushes some land values up.”

He says that raised expectations that Class A—or the highest rated productivity ground—had reached a new plateau in values and wouldn’t go down.

But Shew notes, as of 2025, there’s been a 10% pullback from those ’21 and ’22 peaks. And that’s on the highest rated ground in terms of productivity.

Class B ground values have been more resilient.

2. In California, Water is Half Your Land’s Value

Looking at the data, Shew says in California, water security drives the value, particularly for permanent crops. Tier 1 districts with multiple water sources maintain high values, while “white space” (areas without district water) is seeing significant distress and land fallowing.

“A lot of people are already talking about water regulations, how water security plays a role, and, permanent crops have been under duress for close to three years now,” Shew says. “So that’s not new, but we’ve quantified the impacts regionally, and across ag districts, and by permanent crop type.”

The crops showing this trend in spades: almonds and pistachios.

“For Tier 1 districts, for almonds, you’re looking at $30,000 plus an acre. And then you go to Tier 2 districts, and you’ll see it around a little over $20,000 an acre. Outside of districts, it’s called white space and you’re actually at $13,000 per acre, which is almond ground being sold as bare ground—rip and replace.”

(Acres.com)

He says Sustainable Groundwater Management Act (SGMA) will mean that 500,000 to 750,000 acres of irrigated farmland will have to be fallowed or pulled out by 2040.

“So that’s about 10% of the farmland in California’s Central Valley, most of it in San Joaquin,” so we’re seeing some initial phases of that as we’ve seen tens of thousands of permanent crops come out in the past few years,” Shew says.

He adds, “Water regulatory bodies have put more pressure on farming in California. It’s just going to create a harsher environment for how water gets distributed and allocated.”

Resilience via Government Assistance

Programs such as the Farmers Bridge Assistance are preventing forced land sales by supporting farm operations, which keeps land values stable despite two years of challenging economics. He says we are reaching the tipping point in year three.

“Farm operations can be poor for a year or two and you’re not really going to see it show up in land values,” he says. “But we’re on a third year of this, and we’ve got other challenges that are fairly unprecedent at the same time, so there’s a lot to watch.”

“If you have to declare bankruptcy on your farm, 80% of most farm balance sheets is land, so that’s the large asset that’s going to get sold by the bank,” Shew says. “Government policies to provide support, The Farmers Bridge Assistance is the most recent one that probably plays the largest role, and it just helps farmers get to the end of ‘26, where hopefully balance sheets are in a good place.”

He’s also watching how the provisions in the One Big Beautiful Bill come to bear this fall and at year end.

“Reference prices for, rice, in particular, is one that comes to mind. Those will take place and hopefully create some stability, but you have got to get to the end of the year.”

Transaction Volume Stabilization

Nationwide transaction volumes have returned to pre-pandemic (2018–2020) levels, though California is seeing an uptick in volume due to “distress sales” from owners who can no longer float the costs.

“The low interest rates ‘21 to 23, roughly created a great time for folks to invest in land. They wanted to deploy capital, and land is the definition of a real asset,” he says. “You had that boom, and then, of course, as rates went up in ’23 and ’24 and values stabilized at much higher levels, it turned off that capital allocation.”

(Acres.com)

National farmland transaction volumes in 2024 and 2025—transaction count, acreage turnover, and overall volume of dollars—is approximately the same as 2018 and 2020.

“Q4 of ‘21 and Q1 of ‘22, we saw three times the typical amount that would turn over,” he says. “So in Q4 of 2021, we saw 10 billion in farmland in one quarter—high volume and high values.”

While 2021 was the big, from a year-over-year standpoint, that began to fall back, by 20%, then 30%. He says the flattening from 2024 to 2025 is a bright spot to show overall stability.

“We’re not going to continue to see less transactions or lower sales volumes. We’re seeing that stabilize at a more consistent level alongside where interest rates are,” he says. “And presumably, if we see interest rates decrease, we will see that pick back up, and start what may be another cycle.”

You can download the full Market Values Report here.

Iowa Farmland Values Rise 1.3% As Market Shows “A Little Bit Of Optimism”

Wed, 11 Mar 2026 18:51:48 GMT

In its spring survey of farm managers, real estate agents, and bankers, the Iowa Realtors Land Institute reports a slight trend upward in farmland values.

Market Appears to Be Firm

“Across the nine crop reporting districts, from September 1 to March 1, statewide values were up 1.3% so finally we’re seeing a little bit of optimism in land market,” says survey coordinator Matt Vegter of Hertz Farm Management “It’s a pretty flat market year over year, but at least a little bit more optimism here in the last six months.”

Vegter adds he was surprised all districts were up, and he notes eastern Iowa was higher than central or western Iowa.

Buyers Seek Quality

Over the past year, this group’s research has shown Iowa farmland with a 0.1% net gain.

The highest values for high quality crop land acres are:

Northwest: $15,297
East central: $14,824
Northeast: $14,446

The most recent study from the Chicago Federal Reserve pegged a 5% increase in “good” Iowa farmland from October 1, 2025 to January 1, 2026.

Slight Uptick in Values Despite Market Headwinds

Respondents say the top three factors influencing the land market are commodity prices, supply of land, and interest rates—in that order. Despite tough profitability in commodity production, the survey points to limited inventory continuing to support land values.

More than 70% of respondents say the volume of land for sale is similar to 10% less than one year ago. Whereas only 12% say more land is available today than 12 months ago.

The survey coordinators point to the announced government payments providing additional support.

“Motivated buyers are still active and well-priced farms are still moving. We’re seeing that from both producers looking to expand and investors who continue to view farmland as a reliable long-term asset,” Rebecca Frantz of Hertz Farm Management says. “Inventory has been tighter, and we don’t expect that to change dramatically in the near term. When sellers do bring quality land to the market, there are still buyers ready to act. That balance is what’s keeping the market on solid footing.”

Not surprisingly, since September Iowa pasture values increased 2.6% over the past six months thanks to steady cattle prices. Also of note, timber and recreational land values rose 2.2%.

What’s In Store for Iowa Farmland Values?

As for a farmland values outlook, 70% of survey participants responded they expect land values to increase 0–10% over the next five years, and 5% expect lower values in five years.
And regarding who is buying land, the survey reports 67% of buyers are farmers or farmers with 1031 funds.

How Trump’s Bridge Payments Could Affect Farmland Prices

Wed, 10 Dec 2025 18:11:55 GMT

Farmers National Company president Paul Schadegg sees the recently announced $12 billion in bridge payments to farmers having a variety of effects on the ag economy.

“They think it’ll be a shot of adrenaline to the ag economy,” he says on “AgriTalk.” “There are some people who say they’ll use it to pay down debt or use for operating cash. Some need a new combine or tractor, and it might go toward that. And subsequently, it could add to the cash a buyer has in their pocket that they can deploy toward a land purchase, so it’s going to cover a broad spectrum.”

The bridge payment announcement coincides with the busiest time of year with higher volumes of land sales.

“It’s really active this time of year. We see a lot of land sales between October and March. We’re in the thick of it now,” Schadegg says. “The pipeline is full as we get into January and February for land sales.”

Steve Breuere from Peoples Company tells Paul Neiffer on the “Top Producer Podcast” about 40% of their land sales volume happens in the fourth quarter of the year.

Before the bridge payment announcement, Farmers National released their 2026 Farm Input Outlook. According to that report, input costs are projected to increase slightly compared to last year. Fertilizer prices are the biggest driver, most notably nitrogen. There will be modest increases in chemicals, financing costs, equipment and labor. Categories showing flat to small increases include seed, fuel and land.

Specific to cash rent, Schadegg calls out farmland in Colorado, western Nebraska and southwestern Kansas for illustrating elevated pressure on those rates because of increased input costs. However, more central areas of the country Iowa, the Dakotas and Minnesota aren’t as pressured.

Peoples Company Boosts Farmland Holdings with Strategic Acquisition of Murray Wise Associates

Thu, 23 Oct 2025 15:57:30 GMT

Peoples Company continues a series of acquisitions to expand its land brokerage, appraisal, farm management, and capital markets services. Today, the company announced its latest acquisition: Murray Wise Associates, LLC, which is scheduled to close on Nov. 15, 2025. In recent years, Peoples Company acquired two other Illinois-based firms, Land Pro LLC and The Atkins Group.

“Murray Wise Associates has long been recognized as a trusted name in farmland auctions and brokerage,” Steve Bruere, President of Peoples Company said in the company’s announcement. “This acquisition not only strengthens our presence in key agricultural markets but also reflects a broader shift in the industry toward leveraging specialized farm management expertise. We’re excited to welcome the Murray Wise team and to continue delivering exceptional value to landowners and investors.”

Founded by Murray Wise 25 years ago, Murray Wise Associates has completed more than $5 billion in value of land and agribusiness transactions across 20 states. Its nine team members will transition to the Peoples Company team. In November 2021, Farmland Partners acquires Murray Wise Associates.

“Joining forces with Peoples Company creates tremendous opportunities for our clients and team,” Eric Sarff, President of Murray Wise Associates and whose new title will be Peoples Company vice president, said in the company’s announcement. “Peoples Company’s national reach and comprehensive service platform will allow us to deliver even greater value while continuing to provide the personalized service our clients expect.”

The company leaders say this acquisition highlights the trend of partnering institutional and asset management firms with specialized farm management companies. The projected goal is to provide operational efficiency and enhance returns.

“MWA has a talented team that has partnered closely with farmers and clients across the country to grow FPI’s management portfolio over the past four years,” said Farmland Partners President and CEO Luca Fabbri. “I’m thrilled that they will be able to continue their growth under the Peoples Company umbrella. Peoples is a leading farm management firm with a cutting-edge proprietary technology platform, and we look forward to working closely with them in the future.”

In Today’s Ag Economy, What’s Supporting Land Values?

Mon, 23 Jun 2025 20:29:13 GMT

When looking at the data from 2024 and 2025 so far, Doug Hensley, president of Hertz Farm Management, says keeping perspective is important.

“Coming out of the 2020 through 2023 growing seasons, agriculture in general was probably in its strongest financial footing that it has ever been in, or at least in the last 50 years,” Hensley says.

He says 2024’s farmer income was kept afloat by the ECAP payments along with stronger markets in January and February in the early months of this year.

“A lot of people had a little bit of profit and are fighting to see another day, and out in the countryside right now, it’s not a perfect crop everywhere, but holy buckets, I mean it’s going to be a big crop, if we finish this thing,” Hensley says.

Hensley will be watching crop conditions through pollination — particularly in the next three weeks.

Uncertainty Tampers Land Available For Sale

Hensley says this past fall, land values dipped with lower commodity prices, higher interest rates, and higher input prices challenging profitability.

“With the early ‘25 rallying commodity prices and the ECAP payments really supporting cash flow out in the countryside, we actually saw a little bump in the land market this spring,” he says. “This I would attribute to the fact that very few farms have sold.”

Regarding the lower availability of farmland for sale, Hensley says it can be attributed to human behavior.

“Anytime you get one of these geopolitical environments where there’s lots of things going, tariffs, and just the transition to the new Trump administration, it unsettled a lot of things,” he says. “And when there’s lots of uncertainties, people have a tendency, especially with big assets, just to hold off on making decisions. That’s what actually supported the land market.”

(Chicago Federal Reserve Bank)

According to the Chicago Federal Reserve Bank’s survey of farm lenders, farmland values across the “I” states remained steady compared to the previous year. However, those values were supported by lack of supply — not stronger demand. Farmland available for sale and the actual sales (by farm number and by acreage) were all lower in Q1 2025 compared to 2024.

Peoples Company tracked and reported on 28 tracts (2,007 acres) sold at public auction in Iowa in May 2025. The price was $9,289 per acre, and calculated just for tillable acres the average price was $11,895 per acre and the average per CSR2 was $160.

(Peoples Company)

What About Land Available for Sale Through the End of the Year?

Hensley says going forward, sellers might make more land available on the market.

“I think we’re going to see volume in the land market increase, probably every month from now through harvest,” Hensley says. “So it’ll be an interesting harvest season and end of summer, but right now I think the land market looks pretty good.”

Randy Dickhut with Ag Economic Insights is watching the share of farmland purchases financed by debt. He reports an increasing share using debt for purchase, mostly notable in Indiana but also Iowa and Illinois showing an increase as well.

(Acres.com and AEI.ag )

“This isn’t surprising given strong farmland values and sluggish farm income, especially for corn and soybean producers,” he says.

Dickhut breaks down the commonly referenced statistic that 85% of farmland is debt-free, and he highlights how now that number is closer to 80% in Iowa at a statewide level. The level of debt-free farmland varies across the five state he analyzed, Iowa, Illinois, Indiana, Ohio, and Minnesota, where an average of 27% of farmland sales between 2021 and 2024 reported a lien.

His analysis underscores how land and debt are critical parts of the farmer’s balance sheet as real estate accounts for 84% of farm assets and 67% of all farm debt.

“However, farm incomes have been quite volatile over the last few years,” Dickhut says. “As such, it stands to reason that debt might be more common in 2024 than in 2021 or 2022.”

And from his analysis, across Indiana, Illinois and Iowa, the share of land sales using a loan was higher in 2024 than any other earlier year reported.

From the Chicago Federal Reserve ag banker survey, other results included:

69% of the surveyed bankers expect farmland prices to be unchanged in the second quarter of 2025
Annual cash rents declined across the district for the first time since 2020
This year, average annual cast rents dropped 3% in Iowa, dropped 2% in Illinois and went up 1% in Indiana
No banker in the survey observed higher rates of loan repayment in the first quarter, compared to Q1 2024
39% reported lower rates of repayment by their farm customers
On average, 19% of their farm borrowers (still a small percentage) had more carryover debt from last year’s crop carried over into the new growing season, compared to the amount of carryover debt one year ago

Iowa Farmland Holds Strong: Discover the Factors Behind Six Months of Consistency

Thu, 27 Mar 2025 11:35:00 GMT

The Iowa chapter of the Realtors Land Institute conducts a twice a year survey to show trends in the state’s farmland values. The latest survey was sent out on March 1, and committee co-chairs Rebecca Frantz and Matt Vegter say the results show “a stable market.”

Whereas from March 2024 to September 2024, respondents said the value were down 5%, this year’s March survey shows values more steady at dropping just 1%. Comparing March 2024 to March 2025, the Iowa farmland market is down 6%.

The survey asks for opinions on the current status of Iowa’s farmland market.
Vegeter highlights the early March time frame as weighing on respondents with uncertainty around tariffs, however, overall greater optimism since September due to strong harvest results and improved commodity prices.

“This is stable compared to how bearish the results were in September,” he says.
Across the nine reporting districts, only the southcentral district was slightly positive at up 0.2% since September. The other districts ranged from -2.1% to -0.1%.

In September, all districts were down from the previous March with ranges from -3.6% to -5.8%.

As for what’s driving the value of farmland, Frantz says the factors are similar from September 2024 until March 2025. In order, the respondents rank them: commodity prices, interest rates, supply of land, general economic inflation, and government support.

Regarding return on crop land, Frantz says respondents say 2 to 3% return is expected.
She highlights a tight supply of ground is adding to the steady values. More than one-third of respondents say 6 to 10% less land is coming to market than one year ago. Only 28% says it’s a similar amount.

Pasture acres showed stability. And Vegter notes a surprising strength in timber/non-tillable acres.

“Eight out of nine crop reporting districts showed an increase in values for non-tillable/timber acres, so there’s certainly a demand for recreational properties out there. Despite all the uncertainty through the fall, through the presidential election and in and the last few months, folks are still looking for rec ground,” he says.

Farmland Meets Cryptocurrency: 4 Emerging Investment Trends

Fri, 21 Mar 2025 17:30:40 GMT

The past 15 years have brought two developments that have changed the dynamic for farmland investment. The financial crisis of 2008 gave a renewed focus for institutional investment in farmland as an alternative asset. Coincidentally, bitcoin, the first cryptocurrency, was founded around the same time in 2009.

Here are four key ways the two assets compare.

1. They are both rare.

As Steve Bruere from Peoples Company points out, only 1% to 2% of farmland turns over each year.

“I always tell people there are two types of people in the world. People who own farmland; and people who wish they did,” Bruere says.

Mike Rohlfsen is a consultant who co-founded Agris Academy to help farmers think differently about grain marketing, and as a fan of cryptocurrency himself, he also regularly gives presentations explaining the opportunities with cryptocurrency.

“For example, you can think of bitcoin like digital gold because it has natural scarcity. There will never be more than 21 million bitcoins,” Rohlfsen says.

2. The two investments are on different ends of the risk spectrum.

Bruere says for investors, owning farmland provides an asset positively correlated with inflation. As inflation goes up, so do farmland values. And farmland values are negatively correlated with public equities.

He says cryptocurrency, such as bitcoin, and farmland as alternative investments are complementary—not competitive. While cryptocurrencies are still perceived as a higher risk, farmland carries a long-standing performance curve.

“They used to compare farmland with gold, but it was said it was gold with a coupon because it had a dividend yield,” Bruere says. “Now, crypto is the modern gold, but you can call farmland crypto with a coupon because it allows investors to store wealth, be inflation-protected and have an annual cash yield, which you don’t get from crypto or gold.”

Bruere also believes as the interest in the general crypto market increases, it broadens the overall pool of investors who are thinking about alternative assets.

“Cryptocurrency may increase interest in farmland,” he says.

3. Tokenization.

The cryptocurrency market has different platforms, such as Solana and Ethereum, that enable tokenization — using a fractional ownership structure on the blockchain.

“The concept where you can buy fractional pieces of a bitcoin can also apply to farmland,” Bruere says. “It would cost $3.2 million for 160 acres at $20,000 per acre. Fractionalizing that in a way with crypto opens up a new way we are able to think about farmland ownership.”

Rohlfsen says as farmland ownership interest increases, it could help to satisfy an increasing appetite for the asset without an increase in supply by providing greater access to investors at smaller, more affordable parcels.

“You’ve seen it play out in fine art where someone purchases 1/1,000 of an art piece through tokenization. And it’s gotten traction,” Rohlfsen says. “If you broke up a 160-acre parcel, you could allow someone to buy it 1 acre at a time.”

4. The time for transformation coincides with a generational change and a technology advancement.

“We are entering a time where there will be a massive wealth transfer from baby boomers who are looking for alternative investments and ways to allocate capital,” Bruere says. “That demographic shift of where the wealth is will mean more interest in alternative investments.”

The shift of where that wealth is being held, who is holding it and with what expectations is happening in parallel with the blockchain and cryptocurrency technology.

“What this leads to is disintermediation. Blockchain allows anyone to transact freely and openly, and consensually without a lawyer, bank or middle layer. We can expect the increased digitization of anything transactional,” Rohlfsen says.

Farmland "No Sales" Push More Transactions To Different Methods

Wed, 16 Oct 2024 20:50:33 GMT

Emily Oberbroeckling, a farmland appraiser with Iowa-based Peoples Company, says there’s always an uptick in properties for sale during the fall. For the landowners who may considering selling some of their land in the next few months, she joins the Top Producer podcast to dive into a few ways to approach it.

According to Oberbroeckling, there are three main methods used to sell farmland:

Sealed Bid
Auction
Listing

Which of these strategies is used depends largely on where the land is.

“It really depends on the location and what drives properties to move in that market,” Oberbroeckling says. “In northeast Iowa, it tends to be more of a sealed bid, quieter market.”

By quieter market, she means it’s more private, where sellers may not want neighbors and others in the area to know the details of the sale as they would with an auction.

“It is almost a driver from the seller standpoint of what they want to see happen and who they want to have at that auction,” she explains. “If you’re really serious buyer, you’re going to be at those sealed bids.”

As for listings, Oberbroeckling shares there’s currently more properties for sale this way than going to auction in Iowa. This could be due to “no sales” that have been happening in the area where the auction doesn’t meet the seller’s reserve price.

Paul Neiffer, host of the Top Producer podcast and Farm CPA, adds this method is often used when a seller isn’t confident an auction would hit the price they have in mind.

“They figure they can list it, and if it works that’s great. If it doesn’t work, then maybe they do an auction next,” Neiffer explains.

Oberbroeckling says the type of property plays a role as well.

“We tend to see more listings on the more recreational or pasture use of a property,” she says. “We see that the good tillable farmland sales selling at public auction.”

Catch up on episodes of the Top Producer podcast here

Farmers Are Now Being Offered $1,000 Per Acre or More to Lease Their Land For Solar

Wed, 08 May 2024 19:57:37 GMT

The push to add solar energy is gaining traction across the U.S., and it’s coming with sticker shock on just how much solar companies are willing to pay farmers to lease their ground. A survey of farmers shows the majority of farmers are being offered more than $1,000 per acre by companies for solar leasing, and that could also drive up the price of cash rental rates.

The Biden administration has a goal of a net-zero electric grid by 2035, with solar and battery-powered energy as three vehicles to get there. As the administration works to accelerate their “clean energy” plan across the U.S., land is in high demand, especially for future solar projects.

Michael Langemeier, an agricultural economist with Purdue University, says the Ag Economy Barometer is revealing the sticker shock of solar leasing rates. The survey of 400 agricultural producers, is now asking farmers how many had actively engaged in discussions with any companies about leasing farmland you own for solar installation, and the response was surprising.

“It was 19% who said they have engaged in discussions, and so think about that, that’s a huge percentage of the survey respondents have actually engaged in someone about leases. That doesn’t mean they’ve signed a thing, but that means that they’ve actually been approached,” says Langemeier.

The April survey showed a noticeable uptick in the percentage of farmers who reported having a discussion with a company about it in the last 6 months. In April, 19% of farmers said they’ve had discussions, up from 12% in March.

The bigger surprise may be in the high rates solar companies are offering farmers.

58% say the rates were over $1,000 per acre
30% say the rates they were offered ranged from $,1000 to $1,250 per acre
28% say rates were more than $1,200 per acre.

With expanding renewable energy installations such as wind and solar, The Top Producer Podcast host Paul Neiffer asked David Muth of Peoples Company Capital Markets , the Investment platform for Peoples Company, how those land uses change long term land values.

“This is for the entire U.S.,” he adds. “That’s a high rate even for the eastern Corn Belt where our cash rates are much higher, but think about what even a $750 rate would mean in the Great Plains where the cash rents are much, much lower. And so what you’re having here is these solar lease rates that are multiples of the current cash rent rates.”

Langemeier says as farmers and land owners are offered high leasing rates for solar, he thinks the push for solar will then spill over to other cash rents.

“That’s going to put upward pressure on cash rents, and it’s probably going to put upward pressure on land values, given that it’s local,” he says. “And so it probably impacts a fairly local area, depending on whether your area has solar leasing or not, but it certainly has pretty wide ramifications on what’s going on in agriculture.”

How Do Wind, Solar, Renewable Energy Effect Land Values?

With a price tag of more than $1,000 per acre, t’s enticing for farmers who are staring at crop prices below their cost of production. The April Ag Economists Monthly Monitor survey released this week showed farmer sentiments are dropping. The survey, which is conducted by Purdue University and the CME group, fell 15 points from March to 99.

Purdue says it was the weakest farmer sentiment reading since June of 2022 and the lowest current condition rating since May of 2020 as both the current condition index and the future expectations index saw a drop.

“People became less optimistic about what was taking place on their farms today, and they’re also starting to show some evidence of being some concerns about where we’re headed here over the course of the next year,” says Jim Mintert, director of the Center for Commercial Agriculture at Purdue University.

Purdue economists say farmers are concerned about their current financial situation and expectations for weak financial performance in the year ahead were the driving forces behind the fall-off in farmer sentiment. The April Barometer survey was conducted from April 8 through April 12, 2024.

How Do Wind, Solar, Renewable Energy Effect Land Values?

Fri, 26 Apr 2024 21:04:59 GMT

Since the signing of the Paris Agreement and its Net Zero by 2050 iniative, the ripple effects are still being ironed out as the demand for renewable energy increases.

With expanding renewable energy installations such as wind and solar, The Top Producer Podcast host Paul Neiffer asked David Muth of Peoples Company Capital Markets , the Investment platform for Peoples Company, how those land uses change long term land values.

“We’re really seeing emerging revenue streams from our land base–outside of the ag production,” he says. “We’re trying to get our arms wrapped around the asset management strategy and really get this well positioned. So over the next 10 or 20 years, we’re expanding revenue right and capturing that correctly.”

Muth shares the estimate that over $1 trillion dollars a year is being invested globally in the low-carbon energy transition.

“If we step back and look at what that means for farmland, we’re taking our energy production system from highly centralized production facilities and we have to distribute it,” he says.

The team at Peoples Company used the Princeton Net Zero America study as the basis scenario for its work, which shows if there are 6,000 wind turbines in Iowa today, it needs to increase to about 48,000, which could bring almost $1 billion a year in additional revenue back to the landowners from the turbines.

Muth highlights the considerations for landowners with solar power are different than wind.

“With solar, it’s different. There’s certainly a free market element to this where the revenue streams and the value equations associated with the land in different areas will drive just how high they’ll push those numbers,” he says.

Solar’s Impact On Rural Property Values

He notes he’s seen annual leases with standard escalators for $1,100, and there are additional state and federal incentives.

“In Illinois, there’s been a big push, and we’ve seen options for solar development contracts on some of the best of the best farm ground for $1,400. It is what they’re talking about as a starting place on these assets. The core question is because it’s a fundamental shift in land use, how do you look at the underlying land value where you put solar in place?”

Thinking of recent trends, he says Illinois farm land has appreciated 7% a year, but the future appreciation rate is unknown just as the productivity of the land after solar panels are removed is unknown.

“It’s part of this sort of chaos that landowners are having sort through,” he says. “That’s where a pretty detailed discounted cash flow and understanding how much am I really making on that $1,400 an acre lease payment with a 2% escalator if the underlying farmland value doesn’t appreciate the way that the rest of that highly productive Illinois farm ground is going to appreciate.”

Pop-Up Solar: Can Farmers Make Fertilizer, Fuel and Electricity from the Sun?

Muth says the biofuels industry growth will also effect land values as the production of corn and soybeans is needed for Sustainable Aviation Fuel and renewable diesel.
He discusses more about wind, solar, biofuels as well as carbon storage opportunities on The Top Producer Podcast.

Who Is The Driving Force Buying Farmland?

Thu, 25 Apr 2024 19:21:47 GMT

David Muth of Peoples Company Capital Markets, the Investment platform for Peoples Company, shares how institutional investors have reacted to higher interest rates on their land investments pursuits.

“There’s certainly a significant infrastructure of institutional farmland investment groups that are committed to this to the asset class,” he says. “They’re committed to continue maintaining their portfolios and we’ll continue to see quite a bit of activity from those folks, but certainly there is there is a bit of a changing dynamic in their capital stack overall.”

He says while farmers are buyers in more than 80% of the farmland transactions today, the past 30 years have brought changes in who buys farmland and how it’s bought. What started in the ‘90s with more institutional ownership of U.S. farmland became a structured opportunity at a larger scale in the early 2000s. Today, there are multiple farmland REITs such as Farmland Partners and Gladstone Land Company.

Peoples Company recently released a white paper “The Evolution of Farmland As an Institutional Asset.”

Farmland as an investment has five unique characteristics compared to other options, says Muth:

It’s stable
Investors get cash yield
Its appreciation rate
Has a driven long-term outcome
Zero vacancy rate

Muth discusses the current trends on the Top Producer Podcast:

“Certainly, when we went into the financial crisis in 2008, you started to effectively see a lot of the long-term fixed income types of products go to zero. Then you started thinking about quantitative easing and all of the Fed tools that were deployed formally. It became really appealing for a lot of these funds in this class of investor to look at farmland.”
Muth says a few parameters have emerged for the type and location of land deal most appealing to the institutional investor.

“It’s regional—you see a heavier institutional presence in California, the Pacific Northwest, and the Delta,” he says. “These groups target a specific size of deal--$10 million is the threshold typically because of due diligence and overhead costs going into each deal.”

The current interest rate environment has deflated some of the appeal of farmland for this type of investment.

“One significant element is just simply the increasing cost of debt,” Muth says. “A lot of the large institutional farmland buyers will use leverage in order to create a higher IRR (internal rate of return) outcome. And if you go back to when we were really seeing a lot of these funds build right the portfolios built, debt was incredibly cheap.”

Even with higher land rents, Muth says that has not kept up with the service debt costs which have doubled or even tripled in the past several years.

He adds at the same time other investments are showing better annual cash returns from fixed income outcomes and products.

“If you look at farmland values in the Corn Belt, 2% cap rates are pretty common. But you can go out and get fixed income at 5% or 6% with some really stable products these days,” he says.

Muth says farmland investors are still looking for deals—deploying a strategy of looking for distress deals for example in California almond production or Washington state apple production.

New Tools Bring New Investors

Peoples Company has partnered with Acre Trader, which is introducing farm land ownership as a retail investment.

“For folks that maybe don’t have the capacity to go out and buy a farm on their own, for this group or class of investors, Acre Trader enables access to the farmland asset,” Muth says. “They’re representing a movement of retail capital into farmland, and we’ve gotten really interested in working with registered investment advisors and wealth managers.”

New Land Analysis Tool Puts a Twist on Plat Book Concept

Muth shares more on Top Producer Podcast:

Bankruptcy Puts $370 Million Of California Farmland for Sale

Sun, 04 Feb 2024 23:15:19 GMT

Prima Wawona , a stone fruit producer in Fresno, Calif., announced in October it filed for bankruptcy with more than $600 million in debt. Since then, the company said it would liquidate its assets through after an unsuccessful attempt to sell through auction.

Now, The Fresno Bee reports the company will lay off 5,411 workers ahead of the sale of more than 16,000 acres of farmland valued at $370 million. The Bee reports the layoff impacts 3,743 seasonal employees.

The Bee said interest is high in the land as Fresno Irrigation District, Alta Irrigation District and Consolidated Irrigation District service some of the parcels.

Prima Wawona became the largest stone fruit grower in the country following the acquisition of Gerawan Farming in 2019 . It also added the stone fruit breeding assets of Burchell Nursery in 2018 .

Paine Schwartz Partners invested in the companies following the merger. The Bee said industry insiders estimated the value of the Prima Wawona at $1 billion at the time of the merger.

The Bee said the company indicated mismanagement, a lack of understanding of the tree fruit industry and ineffective high-priced consultants as part of the reasons for its collapse.

“The liquidation of Prima Wawona is a sad day for the generations of men and women who worked tirelessly to build and tend to these orchards over the last half-century,” Dan Gerawan, former CEO, told The Bee.

Editor’s note: Wawona Frozen Foods issued the following statement related to the Prima Wawona matter.

“The San Joaquin Valley-based, family-owned and operated Wawona Frozen Foods is not affiliated in any way with the fresh fruit company, Prima Wawona. Wawona Frozen Foods is a third-generation company which just celebrated its 60th year in business and is among the largest frozen fruit companies in the nation.”

Which Foreign Country Owns the Most Farmland in the U.S.? Hint: It's Not China

Thu, 11 Jan 2024 17:24:37 GMT

Controversy continues to grow across the U.S., and China is the primary target of the new rules. However, China doesn’t own the most farmland in the U.S., according to a new USDA report. It’s actually Canada, which accounts for 32%, or 14.2 million acres.

Rounding out the top five are the Netherlands at 12%, Italy at 6%, the United Kingdom at 6% and Germany at 5%. Together, citizens in those countries hold 13 million acres, or 29%, of the foreign-held acres in the U.S. China owns less than 1%, or 349,442 acres.

All told, 43.4 million acres of forest and farmland in the U.S., or 3.4% of all ag land, is foreign owned as of Dec. 31, 2022. Roughly 30 million of those acres are reported as foreign-owned, with the remainder primarily under a 10-year-or-longer lease. Of the 30 million, 66% is owner-operated, 14% has a tenant or sharecropper as the producer and 12% report a manager other than the owner or a tenant/sharecropper as producer. The remaining 7% are “NA.”

USDA says the two biggest Chinese-owned companies with land holdings in the U.S. are Brazos Highland and Murphy Brown LLC, which owns Smithfield Foods. Brazos Highland reported owning 102,345 acres, and Smithfield owns 97,975 acres.

The top five states with the largest Chinese holdings are:

Texas at 162,167 acres
North Carolina at 44,776 acres
Missouri at 43,071 acres
Utah at 32,447 acres
Virginia at 14,382 acres

USDA reports those five states combined account for 85% of China’s farmland ownership. In Texas, USDA reports China has long-term leases associated with wind energy, and in North Carolina and Missouri, ownership is tied to Smithfield and producers who contract for pork production.

More States to Take Up Possible Bans in 2024

Foreign-held farmland has become a hot button topic on Capitol Hill. Farm Journal Washington correspondent Jim Wiesemeyer thinks it will continue to gain momentum in 2024 as a political ploy used by candidates.

“It’s an emotional issue, and it’s not a simple issue either,” Wiesemeyer says. “I was recently in Missouri, and some commodity leaders worry about the negative consequences of going too far. No one’s saying China should not be watched relative to buying farmland near airports, national security is involved in that case, but more than a few farmers are looking at the potential downsides for pork producers who contract with Smithfield and the number of acres they own.”

One of those unintended consequences is playing out in Arkansas.

“I’m announcing Syngenta, a Chinese state-owned agrichemical company, must give up its landing holdings in Arkansas,” says Gov. Sarah Huckabee Sanders, referencing a 160-acre research site owned by Northrup King Seed, a Syngenta subsidiary.

Eric Boeck, president of Syngenta Seeds North America, told Farm Journal editor Clinton Griffiths: “EPA and USDA many times require us to do work and permitting right in the same state as we’re going to sell products. One of the first things we have to make sure we figure out is how we work with the local community to make sure we’re still getting products tested in their backyard, so we have the ability to sell those products.”

Syngenta argues if they sell that particular farm, Arkansas farmers will be at a disadvantage because research can’t be done in the same weather and soil conditions.

“We’re heavy in the soybean market in Arkansas, some of those maturity zones, we have a very significant market share and savings,” Boeck says. “We want to make sure we’re protecting those farmers’ abilities to be able to use our products.”

Wiesemeyer says the bigger issue for U.S. farmland might be solar panels, with farmers in states like Missouri reporting companies have offered to pay more than $1,000 per acre cash rent to put solar panels on their farm. At such a high price, he says it’s eating up acres of farmland, with the potential to grow even more in 2024.

Look Out Iowa! Cropland Auction Sets Fresh Record in North Dakota

Fri, 03 Nov 2023 21:36:43 GMT

As mortgage rates climb to 20-year highs, near 8%, current high-interest rates are eating away at the housing market. This year is currently on pace to see the fewest home sales since 2008. However, farmland sales aren’t witnessing the same sticker shock. In North Dakota, Pifer’s Auctioneers says it just set a new land sale record in the state.

According to a post on Facebook, on November 1, Pifer’s Auctioneers hosted a live and online land auction. The farm featured 320 acres of highly-productive land in Pembina County, N.D. That’s the very northeastern corner of the state in the Red River Valley. The auction house says the land sold for $17,500 per deeded acre to a family farm operation. It says that shattered the all-time high for North Dakota cropland. Roughly 30 bidders were on hand for the auction.

The Pifer team says that area is known to be tight where very few farms ever get exposed to the market. Another of the enticements comes from the crop rotations in that region. Farms typically grow potatoes, sugar beets, wheat, corn, barley and soybeans. The ability to produce sugar beets and potatoes on medium to heavier loam soil, without irrigation, was a strong draw.

Pifer says at $5.6 million, or $2.8 million per quarter, it breaks down to:

Parcel 1: $18,571 per FSA cropland acre
Parcel 2: $18,393 per FSA cropland acre

Jim Rothermich, vice president of Iowa Appraisal, calls this a bell ringer for the state of North Dakota. Looking at Iowa, he says land market conditions remain steady and strong, but aren’t as hot as they were a year ago.

“Since peaking around May 2022, the market has declined a small percentage and is now pretty much in equilibrium, or flat,” Rothermich explains. “Sales north of $20,000 per acre still happen but nothing like they did in 2022.”

While rising interest rates, higher input costs, drought and corn prices below $5 per bushel have put the brakes on the large increases between 2020 and 2022, cash rent auctions still yield solid numbers, he adds.

“I think market conditions will be stable for the next six months to a year,” Rothermich says. “After that, lower farm income and rising interest rates will whittle down land prices. I do not think we’ll see a double-digit decrease, but there is potential for a single-digit decline. Good quality cropland is still in demand.”

When comparing 2023 to the hot markets of 2022, he says it’s clear land values have cooled off.

Survey Shows Land Values Leveling Off

Thu, 05 Oct 2023 13:01:35 GMT

The Realtors Land Institute - Iowa Chapter has announced the results of it’s September 2023 Land Trends and Values Survey.

This survey is conducted each year in March and September. Participants in the survey are specialists in farmland and share their opinions about the current status of the Iowa farmland market.

For the September survey, they were asked to estimate the average value of bare, unimproved land with a sale price on a cash basis as of Sept. 1, 2023. Pasture and timberland values were also requested as supplemental information.

The results of the September survey showed a minor decrease of -0.2% on a statewide average for the March 2023 to September 2023 time period. This is following the September 2022 to March 2023 time period that showed a 0.8% increase, giving a year-over-year increase of 0.6% for the State of Iowa.

The survey results indicate that after double-digit increases through much of 2021 and 2022, the 2023 land market has confirmed its move toward leveling off. The report authors note, however, the continuing struggle between rising interest rates trying to pull the market lower while positive net farm incomes allow the market to remain supported at today’s values.

The survey results by crop reporting district range from a 2.9% decrease in the northwest district to a 1.3% increase in the south central district. Timber and pasture acres showed slight gains with a 1.1% increase in timberland values and a 1.4% increase in pastureland values across the state.

Reduce Competition: New Tool Partners Investors and Farmers

Wed, 27 Sep 2023 21:36:18 GMT

If asked the question “What’s a piece of ground you would love to own?” most growers could probably picture it. Maybe it’s a neighboring farm or rented land that’s been in the family for decades.

But if that land came up for sale tomorrow, would the capital to purchase it be readily available?

Farmers have plenty of equity in their land, but it’s not easily accessible and could lead to them losing out on that sale. This is a problem the team at Fractal – a U.S.-based farmland financing platform – has set out to solve.

“I’ve had so many farmers that say, ‘We need to double in size, or we need to increase by X number of acres’,” says Ben Gordon, Fractal co-founder. “But when you do the math to see the capital it will take to do that, there isn’t a clear plan.”

To help create that growth plan, Fractal pairs farmers wanting to expand their operations with hands-off investors who recognize the value of farmland.

Farmers Stay in the Driver’s Seat
Fractal purchases minority ownership – up to 45% - in a piece of high-quality cropland selected by the farmer. These acres must be owned and operated by the farmer.

As for the investors, they leave the decision-making up to the one who knows the land best.

“Farmland is a great investment, and farmers are best positioned to manage that investment,” says Gordon.

“We raise capital from outside investors in a big pool and then we find the farms. Investors don’t own a single access to a single farm – they own a portion of a pool.”

With the money from the investment, the farmer can purchase new assets needed for the operation such as land, storage, etc.

The Details
The investment is for a 10-year term. After the first two years, the farmer can buy out Fractal’s ownership at any time. They can also renew the investment once it ends.

In exchange for the investment, the farmer pays an annual premium. This fee can be discounted by implementing regenerative practices on the land such as cover crops and no-till.

Gordon shares that while Fractal may not be a fit for everyone, he hopes it will provide an option to families hoping to keep their farm operating for years to come.

“I’m hoping that we are one small part of a bunch of great legacies and great operations being able to continue,” Gordon says.

Inflation and Recession Pressures: Is Farmland a Good Investment Right Now?

Wed, 23 Aug 2023 15:52:30 GMT

The Federal Reserve is hosting its Economy Policy Symposium this week, which has all eyes on Jackson Hole Wyoming for further details on inflation, interest rates and if a recession is looming. But would a recession effect your operation the way you think?

According to Bruce Sherrick, professor at the University of Illinois, you might not need to worry about what inflation is doing to your farmland values.

“Farmland returns are very highly correlated with inflation,” Sherrick says. “Most importantly, it has a positive correlation with inflation.”

Sherrick says this correlation is derived from the size and debt of the industry.

“Put the entire holdings of the country on one balance sheet and it’s now four trillion plus and only 13% leveraged, so 13% debt underneath it,” he says. “An interest rate change doesn’t have as big of a proportional impact as if you were talking about companies traded on the stock exchange, where the average leverage turns out to be around two-thirds.”

While the percentage of debt is low in comparison, he also highlights it’s mostly long-term, fixed-rate debt. Increasing interest rates won’t have as large of an impact on that, but it will decrease transactions.

Outside of inflation, there may be other reasons farmland values remain elevated.

According to the Federal Reserve Bank of Kansas City, a steady supply of land sales and strong demand from farmers has likely supported broad resiliency of real estate values so far in 2023.

Is It a Good Time to Invest in Farmland?

The Kansas City Fed also reported that growth in farmland values has eased from recent years but remains steady. So, despite higher interest rates, farmland remains a wise investment opportunity.

“People sometimes refer to farmland as an investment in gold, plus a coupon,” Sherrick says. “You get a fairly low annual cash flow, fairly high long-term rates of return and tax advantages to the asset classes.”

He outlines how the type of farmland to invest in remains up to the buyer’s background and risk tolerance.

Annual production crops – such as corn, soy and wheat – offer higher stability due to tenants or crop insurance to help manage risk. However, permanent crops – such as tree nuts, wine grapes or citrus – would be expected to have higher total return over time but higher volatility.

“If I were picking both from a financial and an emotional perspective, the next place I could put a dollar, I still would favor farmland pretty highly,” said Sherrick.

As for an outlook into 2024, Sherrick says to expect moderate changes.

“I won’t be surprised if in the next year we have a softening of land values,” Sherrick says. “It won’t surprise me, but I’m not expecting a crash and I don’t see it as being driven entirely by interest rates.”

Hear more on The Top Producer podcast, hosted by Paul Neiffer:

The Farm CPA Podcast: Steve Bruere, Peoples Company

Fri, 28 Jul 2023 14:28:02 GMT

This week Paul Neiffer has a conversation with Steve Bruere, president of Peoples Company.

Bruere grew up surrounded by agriculture on his family farm in Warren County, Iowa. Today he uses that expertise in agricultural real estate and farmland management.

“I always had a passion for real estate,” he says. “Growing up I wanted my family to buy any farm that would come up for sale, and we didn’t buy enough of them as far as I was concerned.”

While in college, Bruere bought his first piece of farmland (it was financed by his money earned selling sweet corn and pumpkins as a teenager). He also earned his real estate license. The day after his college graduation, he started selling real estate.

In 2003, Bruere became president of Peoples Company, which specializes in real estate brokerage, appraisals and farmland management. Today the company is licensed in 26 states for real estate brokerage and 30 states for real estate appraisals.

Listen to the podcast episode:

How does Bruere describe today’s farmland market? “Wild.”

“It’s probably the hottest real estate market I’ve been a part of in 18 years,” he says. “You’ve just got this perfect storm of high commodity prices, nice government payments and low interest rates.”

Farmland is definitely catching investors’ eyes, Bruere adds.

“During COVID, folks were stuck in their homes and worried about the food supply chain,” he says. “Now we have a newfound appreciation for what farmland means. The stock market got cut in half, while farmland just sits there steadily holding its value.”

As a result, demand from both farmers and investors is strong.

“Right now, we have farmers aggressively buying farmland again and this outside capital that appreciates the attributes of a farmland investment now more than ever,” he says. “This farmland markets incredibly dynamic.”

Listen to additional episodes of the Farm CPA Podcast:

Episode 7: Ken McCauley from Kansas

Episode 6: Dick Wittman and Cori Wittman Stitt from Idaho

Episode 5: Roric Paulman from Nebraska

Episode 4: Dave Nelson of Iowa

Episode 3: Jim Wiesemeyer, Pro Farmer

Episode 2: Breaking Down the American Families Plan

Episode 1: Sara Schafer, Top Producer

New Farmland Bill Would Create a Public Database for Foreign Land Ownership

Sat, 22 Jul 2023 03:07:00 GMT

Sens. Chuck Grassley (R-Iowa) and Tammy Baldwin (D-Wis.) introduced a new bipartisan bill , the Farmland Security Act of 2023 , seeking to further boost transparency in foreign ownership of U.S. farmland.

The legislation builds upon measures introduced by the same senators in the Farmland Security Act of 2022 and amendments to the 1978 Agricultural Foreign Investment Disclosure Act. This bill would require greater transparency for foreign purchases of U.S. ag land, impose stronger penalties for reporting non-compliance, and mandate USDA to audit a minimum of 10% of foreign ag land ownership reports annually.

The issue of foreign ownership is increasingly important as nearly half of U.S. ag land is owned by individuals aged 65 and over, and approximately 100 million acres are expected to change hands over the next decade due to retirement.

What’s included in the Farmland Security Act of 2023?

The measure necessitates a transition to a digital filing system and a public database on foreign ownership for researching ownership trends. It also requires the USDA to report on foreign investment impacts. The bill further emphasizes transparency, complete and accurate data collection, and greater understanding of foreign ownership.

The new legislation introduces stricter penalties for non-compliant foreign owners or “shell companies” by removing the current fee cap of 25% of land valuation, imposing a 100% land valuation fee for non-reporting shell companies unless corrected within 60 days of notification. It authorizes $2 million annually for administration as amended in the Agricultural Foreign Investment Disclosure Act.

Other stipulations include USDA research into foreign ownership of agricultural production capacity and foreign participation in U.S. ag, along with investigations into the use of “shell companies”. State and county-level staff would also be trained to identify non-reporting foreign-owned farmland.

Rural Economy Slows While Farmland Values Stay Strong

Thu, 20 Jul 2023 21:10:22 GMT

The rural economy seems to be set on cruise in neutral gear. That’s according to the Rural Mainstreet Index (RMI) from Creighton University.

For February 2023, the RMI sits at 50.1, down from 53.8 in January. This was the third straight month the overall reading stayed above the growth neutral threshold.

The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral and is generated by a monthly survey of bank CEOs in rural areas of a 10-state region that are dependent on agriculture and/or energy.

“The Rural Mainstreet economy continues to experience slow economic growth,” says Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI. “Only 7% of bankers reported improving economic conditions for the month with 85% indicating no change in economic conditions from January’s slow growth.”

Meanwhile, the region’s farmland price index decreased to 63.5 from January’s 66. This was the 29th straight month that the index has advanced above 50.

As a result of solid farm financial conditions, the farm equipment-sales index stood at 52.1, which was down significantly from January’s 61.4. The index has risen above growth neutral for 25 of the last 27 months.

The February survey polled bankers on importance of ethanol, as the region contains 73% of the nation’s ethanol plants and accounted for 76% of U.S. ethanol capacity for 2022.

Around 90% of bankers with an ethanol plant in their area indicated it was an important industry for their local economy.

To meet President Biden’s CO2 reduction goal contained in his Inflation Reduction Act, ethanol plants would be required to reduce their CO2 emissions by 40% by 2030. This will likely mean the capture and sequestration of the CO2 or the closure of a high share of the plants.

Around 60% of bankers support this process assuming adequate compensation to farms over which the pipelines cross. Around 23% of bankers expect that the use of imminent domain will be required to allow underground pipelines to cross farmland in their area.

The slowing economy, higher borrowing costs and labor shortages continued to constrain the business confidence index to a weak 44.4, but up from 40.4 in January.

“Over the past 11 months, the regional confidence index has fallen to levels indicating a very negative outlook,” Goss says.

The RMI, which started in 2005, represents an early snapshot of the economy of rural agricultural and energy-dependent portions of the nation. It focuses on 200 rural communities with an average population of 1,300.

Nebraska Farmland Values Jump 14% in 2023 — Up 30% in Two Years

Thu, 20 Jul 2023 20:38:19 GMT

Farmland values in Nebraska are at historic levels. With a statewide average of $3,835 per acre, values are up 14% from 2022, according to the preliminary findings of the University of Nebraska–Lincoln’s 2023 Farm Real Estate Market Survey .

This double-digit jump is on top of the 16% increase in 2022. This year marks the second-largest increase in the market value of agricultural land in Nebraska since 2014 and the highest non-inflation-adjusted statewide land value in the 45-year history of the survey.

The survey attributes the rise in agricultural real estate values to higher commodity prices, purchases for operation expansion, favorable financial situations for current owners and an increase in buyers acquiring land as a hedge against inflation.

Low interest rates on loans in early 2022 and concerns about inflation fueled demand for investment in land, shared Jim Jansen, University of Nebraska Extension agricultural economist who co-authored the survey and report.

“Monetary policy in 2022 created a dynamic period as the Federal Reserve raised interest rates to combat inflation,” he says. “Interest expenses for land loans gradually rose over the prior year and into 2023 as the Federal Reserve continues policies to decrease inflation.”

The survey reports market values on several types of land across Nebraska. Here are the highlights:

Dryland cropland with irrigation potential was up 16%.
Dryland cropland without irrigation potential rose 13%.
Center pivot-irrigated cropland rose 13%.
Grazing land and hayland land rose 14% to 17%.

Rental Rates on the Rise

Nebraska cash rental rates for dryland cropland rose 7% to 11% across the state.
Pasture and cow-calf pair monthly rental rates rose 6% to 7%.

The Nebraska Farm Real Estate Market Survey is an annual survey of land professionals, including appraisers, farm and ranch managers and agricultural bankers. It is conducted by the Center for Agricultural Profitability, based in the Department of Agricultural Economics. Final results from the survey are expected to be published in June.

84% of Iowa Farmland Now Owned Debt-Free

Tue, 13 Jun 2023 19:47:27 GMT

According to an Iowa State University study, 58% of Iowa’s farmland is under a lease, which is up 1 million acres since the study was last conducted in 2017.

Researchers’ findings reveal farmland leases continue to be handled on a cash rent basis rather than crop share and owner-operated. Since 2017, cash rent, specifically fixed cash rent, has increased 5% to 87%.

“The rise of cash rent, especially fixed cash rent, correlates with the growing percentage of landowners who are part-time and non-residents of Iowa,” says Wendong Zhang, associate professor at Iowa State. “Fifty-five percent of land is owned by an owner who did not farm in 2022, and, of them, over half do not have farming experience. Especially for those landowners, a fixed cash rental contract is a natural choice.”

Only 47% of farmland was directly operated by a landowner in 2017. Today, that number has been cut to 42%.

Iowa’s Farmland Ownership

There are also changing tides in how Iowa farmland is owned. Roughly 80% of Iowa’s farmland in 1982 was in sole ownership or joint tenancy; now, that number sits at 52%. Instead, landowners are opting for a trust , with numbers growing from 1% to 23% since 1982.

Zhang says trusts have recently grown in popularity due to the numerous benefits they can provide:
• Help to keep the farm in the family
• Aid in managing land transitions
• Tax break potential

“Trusts are an especially valuable tool in succession planning,” Zhang says.

The researchers also found 17% of farmland owners do not have a planned successor. However, the survey finds 75% of Iowa’s landowners are interested in selling their land to beginning farmers, thanks to incentives in federal and state tax credits.

“At the same time, over half of Iowa landowners expressed concerns about difficulty finding quality beginning farmers as well as beginning farmers’ ability to pay the best prices for land,” says Jingyi Tong, an Iowa State PhD student involved in the research.

A rise in beginning farmers would tip the scales in another area of Iowa State’s research. Currently, 66% of Iowa’s farmland is owned by people over 65-years-old, which is up from 29% in 1982.

Similarly, women own 46% of the state’s land, and they hold a larger share among senior owners.

Farmland Debt

The study also finds farmland debt is continuing a downward trajectory, with 84% of Iowa farmland owned debt-free — the highest level ever recorded. In 1982, only 62% of land was owned debt-free; however, due to the 1980s farm crisis, researchers anticipated the large gap.

According to Tong, farmers are holding onto their land more in recent years due to increased commodity profits, aging landowners and government payments granted for the COVID-19 pandemic.

3 Things to Know About Purchasing Farmland Now

Thu, 25 May 2023 14:38:18 GMT

Paul Schadegg, senior vice president of real estate operations at Farmers National Company (FNC), joined AgriTalk host Chip Flory on Wednesday. During the conversation, they discussed agricultural real estate demand, impact of interest rates on farmland market, and the outlook for values the second half of 2023. Here are three takeaways from their conversation:

1. Today, people are buying land throughout the year rather than during a more set, traditional time frame.
“We used to say we sell land from October to March and during the rest of the year, there’s not much that happens,” Schadegg says. “But now what we’re seeing is more non-typical buyers, and they’re not afraid to buy land in the spring or summer – during the growing season – where typically that just used to not happen.

“Those guys are not afraid to go in and negotiate payback of inputs, or take a lease halfway through a year, or something like that. It doesn’t necessarily mean that a farmer isn’t going to bid on that land. Because if it comes up for sale, and it’s in his wheelhouse, you know, they’re definitely going to be there.”

In some cases the non-typical buyer is an investor, Schadegg says, but those individuals make up only 20% of land buyers. Eighty percent of ag land buyers are still farmers.

2. Thanks to technology (and the pandemic), you can buy land from your truck or tractor.
Today, farmers can plant corn and buy land at the same time, all while sitting in the comfort of their tractor. That fact is one of the practices the COVID pandemic helped create.

“When the pandemic hit, we started to have parking lot auctions, and we had to scramble to get an online platform set up,” Schadegg

says. “In today’s world that’s simply expected, and it has nothing to do with the pandemic anymore. It has to do with convenience.”

He adds that some people like to buy farms online, because they don’t want to stand or sit in a room with their neighbors as they bid on a piece of property.

“Some people just like the anonymity of buying online,” he adds.

Schadegg says there are still scenarios when a live auction makes the most sense to utilize, and the company employs a group of auctioneers for that purpose.

3. There’s still momentum in land sales, but it’s beginning to show signs of slowing.
Schadegg says Farmers National Company President Clayton Becker looks at the current scenario through a lens of what he calls profit and pressure.

On the profit side: “We’re not seeing that value increase like we were a year ago, but we are definitely still seeing some good stable values,” he says. “For high-quality land, we’re still seeing some great competition which sometimes drives that above-market value.”

From a pressure standpoint, FNC is starting to see less cash being used to purchase land and “a little more lending” happening across the country.

“I’ve said this before, but when we talk about any hiccup in the commodity markets that would have a pretty direct effect on land values. So, you know, we had a little bit of a scare here recently when we saw markets come down, but I think as long as we can maintain some of those levels, (land) does still look like a good opportunity.

Get the full details on the AgriTalk discussion with Schadegg here:

What is Farmland Going for in Iowa?

Thu, 06 Apr 2023 19:07:56 GMT

Farmland sales soared to back-to-back record highs in 2022, with reports of $25,500 per acre in Sioux county, Iowa, in the first quarter.

Farmland Prices in Iowa

The accelerated highs in 2022 don’t look to be hitting the brakes in Iowa in the first quarter of 2023, according to Jim Rothermich, vice president of Iowa Appraisal.

“There’s almost the same number of auctions in 2023 as 2022 for farms selling at $20,000 per acre and higher. Market conditions in 2023 are slightly lower than 2022, but the current market is very solid,” Rothermich says.

Volume of Acres, Given the Market

With this many sale bills on the table, you might think the volume of land sales will slow. If that’s what your crystal ball shows, Rothermich says you might be in for another surprise.

“This was the highest [auction] volume since I started keeping track. I did not see this coming,” he says. “Comparing March 2022 to March 2023, volume is up 68%.”

One of the larger-acre sales that contributed to this 2023 number came from Plymouth Country, Iowa, where 149.91 tillable acres sold for $24,000 on March 10.

To Keep or Sell?

So, what does this mean for sellers? As of first-quarter close, Iowa’s farmland market conditions have stabilized from a super cycle that stretched over two years, according to Rothermich. With this in mind, he has a few suggestions for landowners looking to sell in the next 12 months.

“This market is not at the top, but it is close with historical highs. As time expires, those cash reserves in the countryside will disappear. The 2023 crop will be the most expensive in history. 2023 net farm income is forecasted to be less than the previous two years. Corn ending stocks are projected to be above the past several years which will put a lid on corn prices,” Rothermich says. “Educate yourself about market conditions. You may decide to sell the farm sooner rather than later.”

Owning Farmland Is Now Cool, Even If You Don't Farm

Wed, 01 Feb 2023 22:17:29 GMT

For those in agriculture, owning farmland has long been viewed as a symbol of status and wealth. Now, even individuals who don’t farm are jumping on board, looking to buy farmland. The interest from outside investors has propelled farmland prices higher over the past year, but even with the rapid run-up in prices, experts say we aren’t in the middle of a farmland bubble.

The top two farmland sales in Iowa raked in $21,000 and $20,000 per acre last week. While it’s not a statewide record, the strong interest and bids on farmland are proof farmland prices are in the midst of a bubble, as farmers are still in the majority of winning bidders at auctions today.

Related Story: A New Way to Rent Ground is Gaining Traction - With Cash Rent Bids in Illinois Topping $600 Per Acre

“It is the farmers who can afford to pay the higher prices,” says Jim Rothermich of Iowa Appraisal. “Their hold period is much longer than an investor. A farmer’s hold period could be from 50 to 100 years. So, if they pay too much for a piece of ground over time, it’ll work itself out and in 50 years, people ask, ‘Why didn’t you buy more land at that price?’”

Professional Athletes Are Buying Farmland

Buying farmland is so cool, even professional athletes are now buying land. Earlier this month, Cincinnati Bengals quarterback Joe Burrow, along with Boston Celtics forward Blake Griffin and a few other athletes, pooled together to buy farmland in northeast Iowa. The 104-acre farm was a transaction made through Patricof Co., a private New York investment firm that facilitated the deal.

“Owning land has become popular, it’s trending,” Rothermich says. “If you can go to the coffee shop and say you own land, or even Joe Burrow going to maybe a Super Bowl party and telling all his friends how much land his has, that’s the cool thing to do now.”

Burrow might not be playing in the Super Bowl, but if he does have a watch party, he will be able to tell his friends he owns farmland. Rothermich says the group of athletes purchased the 100 acres in Benton County, Iowa, for just over $10,000 per acre.

“I think they got a good deal, by the way, but they are wanting to get into the land space,” Rothermich says.

It’s not just professional athletes. Entrepreneurs, doctors and lawyers also see it as a symbol of status and wealth, joining their friends who are all in search of owning a piece of prime real estate. And today, that’s farm ground.

Not a Farmland Price Bubble

The strong interest, both in farming and outside of farming, is what’s laying a foundation for continued strength in not only land prices, but also a historic increase in cash rents . Rothermich points out while Iowa is seeing record farmland prices, Illinois is seeing records in the cash rent market.

“Rent auctions provide true open market rental valuation and answer the question: What will the market bear for my ground,” Rothermich says. “Farmers bid based on how much they would pay per acre to farm the ground for the specific lease term.”

“I don’t think this is a bubble because that implies it breaks with a massive deflation,” says Mike Walsten, contributor to Pro Farmer’s LandOwner newsletter. “Yes, there have been quite a few seemingly irrational land auctions and rent auctions at $600 an acre, but there were also quite a few signs of cooling while these headliners occurred.”

Low-Quality Farmland Showing Signs of Weakness

Rothermich points out low-quality farm ground is starting to see some pressure. However, high-quality ground remains the hot commodity, with prices continuing to post gains.

“Yes, values are leveling off,” Walsten says. “The top- and medium-quality ground stills show low single-digit gains. Lower-quality ground is firm where no top-quality ground is available — southern Illinois for instance.”

Walsten says there have been some no sales - and an increasing number of slow sales- that started late fall and now into winter.

“These came where communities are normally much less aggressive on land purchases, the ground was less than top-quality, the percent tillable versus was low, the area has very little livestock, tile, etc. is needed. In a bubble, all this type of ground gets gobbled up,” Walsten says.

Related Stories:

A New Way to Rent Ground is Gaining Traction - With Cash Rent Bids in Illinois Topping $600 Per Acre

5 Eye-Popping Farmland Sales from 5 States

$30,000 Per Acre? Yep, The Details on the Latest Record-Breaking Farmland Sale

Beyond the Buzz: Land Values, Fundamentals and New Services

2023 Cash Rent Outlook: Be Ready for Higher Rates

Rental Rally: Don’t Let High Cash Rents Sink The Farm

Who Can Afford These Soaring Farmland Prices?

Sat, 07 Jan 2023 14:14:19 GMT

Farmland prices continue to soar, as a new record Iowa land sale occurred in Dubuque County, Iowa last week with High Point Land Company claiming it auctioned off 60 acres for $30,000 per acre.

With the financial stakes so high, who can afford to make these big money moves?

Bill Gates

Amassed with a newly purchased 2,100-acre farm in North Dakota, Bill Gates’ Red River Trust now holds the title of a cool 270,000 acres of land across the U.S.

However, AgDay reports the tech moguls’ entrance into North Dakota, at a cost of $6,000 per acre, might not be the warm welcome he may have received in other states.

Law-Abiding Citizens

North Dakota hosts “corporate farming laws” that barres corporations and limited liability companies from owning and leasing farms and ranches.

With the Gates’s new $13.5 million farmland purchase, North Dakotans—including the attorney general—are concerned the sale violates the state’s law.

The North Dakota attorney general’s office sent a letter to the Red River Trust on Tuesday, alerting the trustee of the North Dakota land law.

“Our office needs to confirm how your company uses this land and whether this use meets any of the statutory exceptions, such as the business purpose exception,” wrote Drew Wrigley, North Dakota attorney general.

The attorney general has not yet released a response from the Red River Trust.

A Dose of Perspective

The Microsoft cofounder isn’t far ahead in the private farmland ownership charts.

As of 2022, Gates sits on the farmland list among other celebrities mixed with a few farmers:

Bill Gates: 270,000 acres in 19 states, with his largest holdings in Louisiana (69,100 acres), Arkansas (48,000 acres) and Nebraska (20,500 acres).
Ted Turner: Founder of CNN who owns over 200,00 acres in Nebraska, Kansas, Montana, South Dakota and New Mexico.
Stewart and Lynda Resnick: Owners of Wonderful. The two boast 192,000 acres in California and Texas.
Offutt family: Owners of RDO Equipment, also own 190,000 acres in North Dakota, where they primarily grow potatoes.
Fanjul family: Florida Crystals Corp. owners tend 152,000 acres of sugarcane production in South Florida.
Boswell family: Owners of the JG Bowell Tomato Company that tend to 150,000 acres of tomatoes and cotton in Central California.
Stan Kroenke: Real estate mogul and owner of Kroenke Sports & Entertainment who owns 124,000 acres in Montana.
Gaylon Lawrence Jr: CEO of the Lawrence Group who owns 115,000 acres from the Pacific to the Atlantic.
John Molone: Founder of TCI—a company he later sold to AT&T for a cool $50 billion—hosts 100,000 acres in Colorado, Wyoming, Maine and New Mexico—land thatincludes various well-known ranches.
Simplot family: Operate 82,500 acres in Idaho and Washington including potato production and cattle feedlots.

More on farmland:
New Farmland Price Record: $25,000 Per Acre in Plymouth County, Iowa

Up, Up, Up: 3-Year Farmland Price Trends from 18 States

No Price Top in Sight for Farmland Values

American Society of Farm Managers and Rural Appraisers

Farmland Value Check: Midwest Class A Ground Sees Pullback, Water Security Redefines California’s Market

First, Overall Land Trends

How Are Farmland Values Performing Differently?

What Are The High Interest Trends?

Resilience via Government Assistance

Transaction Volume Stabilization

Iowa Farmland Values Rise 1.3% As Market Shows “A Little Bit Of Optimism”

Market Appears to Be Firm

Buyers Seek Quality

Slight Uptick in Values Despite Market Headwinds

What’s In Store for Iowa Farmland Values?

How Trump’s Bridge Payments Could Affect Farmland Prices

Peoples Company Boosts Farmland Holdings with Strategic Acquisition of Murray Wise Associates

In Today’s Ag Economy, What’s Supporting Land Values?

Iowa Farmland Holds Strong: Discover the Factors Behind Six Months of Consistency

Farmland Meets Cryptocurrency: 4 Emerging Investment Trends

1. They are both rare.

2. The two investments are on different ends of the risk spectrum.

3. Tokenization.

4. The time for transformation coincides with a generational change and a technology advancement.

Farmland "No Sales" Push More Transactions To Different Methods

Farmers Are Now Being Offered $1,000 Per Acre or More to Lease Their Land For Solar

How Do Wind, Solar, Renewable Energy Effect Land Values?

Who Is The Driving Force Buying Farmland?

Peoples Company recently released a white paper “The Evolution of Farmland As an Institutional Asset.”

New Tools Bring New Investors

Bankruptcy Puts $370 Million Of California Farmland for Sale

Which Foreign Country Owns the Most Farmland in the U.S.? Hint: It's Not China

More States to Take Up Possible Bans in 2024

Look Out Iowa! Cropland Auction Sets Fresh Record in North Dakota

Survey Shows Land Values Leveling Off

Reduce Competition: New Tool Partners Investors and Farmers

Inflation and Recession Pressures: Is Farmland a Good Investment Right Now?

Is It a Good Time to Invest in Farmland?

The Farm CPA Podcast: Steve Bruere, Peoples Company

New Farmland Bill Would Create a Public Database for Foreign Land Ownership

What’s included in the Farmland Security Act of 2023?

Rural Economy Slows While Farmland Values Stay Strong

Nebraska Farmland Values Jump 14% in 2023 — Up 30% in Two Years

84% of Iowa Farmland Now Owned Debt-Free

Iowa’s Farmland Ownership

Farmland Debt

3 Things to Know About Purchasing Farmland Now

What is Farmland Going for in Iowa?

Farmland Prices in Iowa

Volume of Acres, Given the Market

To Keep or Sell?

Owning Farmland Is Now Cool, Even If You Don't Farm

Professional Athletes Are Buying Farmland

Not a Farmland Price Bubble

Read More: Who’s Really Behind All These Record Farmland Buys?

Low-Quality Farmland Showing Signs of Weakness

Who Can Afford These Soaring Farmland Prices?

Top 10 Stories of 2022: $30,000 Per Acre? Yep, The Details on the Latest Record-Breaking Farmland Sale