Farmland values 2020
Depressed commodity prices, trade conflicts, weird weather, and the pandemic have all made some wonder, what’s happening to farmland prices this year?
Bruce Sherrick is a professor and director of the TIAA Center for Farmland Research at the University of Illinois. He says every year the USDA does a survey and presents what they believe are the average farmland values for each state.
"This is influenced by a lot of things, but the summary that’s really critical is that the average across the entire U.S. didn’t change from a year ago. It simply doesn’t seem like after all the other things we’ve gone through in the past year that that would have been the outcome," says Sherrick. "You also see the Midwest and the corn, soybean, wheat producing areas a little higher, and then California of course which has very diverse, incredibly high-valued agriculture, a big share of the country’s production."
He says the normal 4th quarter-first-quarter land transaction patterns appear to be stronger this year, which could lead to higher land values.
"Farmland tends to trade after harvest, before planting and that’s been fairly muted for the last few years. Land markets have been pretty slow to turn over and this year things are happening that you wouldn’t have expected to happen. The deals are coming from different locations by different sellers and different buyers," he says. "They’re starting to speed up in a lot of areas and we’re seeing what I would call atypical transactions beginning to emerge."
Lower interest rates are creating a buzz, allowing the purchase of more land for the money. He says about 70% of the available farmland in the U.S. is bought by other farmers.