Soft Landing for Farmland Values in Eastern Corn Belt
2010 thru 2012 saw a big jump in the value of farmland; since then, values have been on the decline. With commodity prices on the decline, the value of farmland has been declining. As Dennis Badger, vice president of collateral risk management with Farm Credit Mid-America reports, Eastern Corn Belt land has been holding its value, “Farmland values in the Mid-America region, which includes Indiana, Ohio, Kentucky, and Tennessee, have held relatively steady despite a challenging farm economy. From July 1 of 2015 to June 30 of 2016, the four state region saw a collective increase of 0.2%.”
But Indiana land has declined 6% during this time frame. Badger says farmers will need to take this into account when putting their balance sheets together and negotiating any cash rent agreements, “Land values are starting to decline in response to lower commodity prices, but at a pace that indicates a soft landing for values in the region.” He told HAT the diversity of operations in the region accounts for the relatively stable land market.
Badger urges producers to be cautious when it comes to buying any new farmland. However, he says, if it looks to be a solid investment today, it is probably a good long term investment, “Land values are expected to decline in the next year, and interest rates are expected to rise. So this is the time to make an investment decision.”
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