Despite major reductions in grain prices during the past 18 months, highly productive and highly tillable farms in Indiana, Ohio, Michigan, and Kentucky have held values near recent record high prices, according to a new report by Farmers National Company, a landowner services provider that manages more than 5,000 farms and ranches in 30 states comprising more than 2 million acres.
“Less productive and lower tillable acreage farms have seen a 5% to 10% decrease in value but still much less reduction than grain prices, which are 25% to 30% lower over the past 1.5 years,” said Jay VanGorden, sales manager for the east region.
Although farmer operators remain the primary buyers of farmland, prices in the eastern region are also driven by investor interest and 1031 tax-deferred exchange buyers around several of the larger cities in the territory, which can drive prices higher, especially for several counties out in the countryside as sellers of development property look for replacement land, VanGorden added.
According to Farmers National Company, the agricultural land market has been “nothing short of exceptional during the past five years.” Gains in value are prevalent across all classes of land in every region of the country. Strong commodity markets, moderate interest rates, buyer demand, and an overall healthy agricultural economy have also supported the growth of land values during this time.
As buyers consider land purchases during the second half of 2024, the additional expenses for interest and lower commodity markets will be at the forefront of their decisions, and the market value of land will adjust according to the level of demand and profitability potential.
