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Farmland values across the Midwest are holding steady for the most part, but that could change in the future.

In Iowa, many agricultura professionals have said they expect to see a continued “modest decline” in land values, according to the Ag Decision Maker newsletter from Iowa State University Extension.

There are several reasons land values are not changing much. Landowners have been facing many uncertainties that could affect land prices, from a wet spring, less than ideal growing conditions and trade policy talk that is showing few signs of being resolved. Each of those factors has contributed to both farmers and agricultural landowners having to wrestle with how they must respond.

With so much going on, it’s critical that landowners and farmers keep a close eye on land values – and have a plan if prices or circumstances change.

Iowa farmland value forecasts

Iowa State University Extension’s newsletter report states that respondents to its survey expect to see a “2% decline in land values in their local area over the next six months from May to November 2019.” Those respondents also expect the Iowa land market to stay fairly unchanged between November 2019 and November 2020.

Overall, the survey’s respondents predict Iowa farmland values to decrease by a modest amount, but then rebound slightly in the long-run. The survey did show respondents predicted a 1% increase in farmland value from November 2020 to November 2021.

Land values are helping the ag industry for now

There is a lot of uncertainty surrounding the agriculture industry at the moment. However, one bright spot is in fact land values. As noted in Progressive Farmer, land values are helping to support agriculture’s overall financial condition.

Those land values are somewhat insulated for now because there isn’t a whole lot of land that’s being put up for sale.

The price of land is very much worth watching, though. Randy Dickhut, senior vice president of real estate operations for Farmers National Company, told Progressive Farmer that he doesn’t expect any drastic changes in the land market this fall. However, Dickhut did say there could be regional or local winners and losers.

Dickhut said there could be a few more farms that have to put land up for sale due to financial reasons. Perhaps they are farmers who elected to go with prevented planting or have insurance payments that won’t cover lost revenues this year.

Overall, though, most sales that Farmers National Company has seen have been due to farmers wanting to retire or people who have inherited the land wanting to sell the land.

Some Iowa producers are struggling, ISU Extension suggests

Farm income has not had a very successful run these last few years. The ISU Extension report states that U.S. farm income has decreased by half since a peak in 2013. What’s more, the Iowa Farm Business Association, the report shares, has shown “a quarter of producers are experiencing liquidity problems and low working capital.”

Once again, the current uncertain state of trade negotiations between the U.S. and China has only added to factors that are keeping down not only land values, but also commodity prices.

More land could be sold this fall

Although not everyone will be put in a bind and be forced to consider selling land, that possibility remains a reality for some. That could lead to more land being placed on the market.

Not every region will see more land become available, though. Location and land quality play large roles in land prices and sales. Some farmers with high-quality farmland in Iowa have been selling land recently, according to Farm Journal’s AgPro. A portion of that could be due to higher financial stress among those producers. Like Iowa, AgPro reports that there are signs of financial stress among farmers in North Dakota, South Dakota and Minnesota.

However, AgPro also reports that buyers are being more cautious, too.

Outlook much brighter than ‘80s downturn

Neither experts nor industry professionals expect any possible land value decreases like what was seen in the 1980s.

As Progressiver Farmer points out, some financial stress among farmers could lead to more land being up for sale, but other factors were worse in the 1980s farm crisis. Among those factors were high interest rates and inflation that had farmers operating until they were shut down by their banks. At that point, their land had lost a lot of its value.

So, what’s different this time around? Dickhut says it’s that farmers today appear much more willing to sell pieces of land, equipment or other assets to try to protect themselves financially and keep themselves in healthier financial situations.

Interest rates and inflation are also much lower right now than they were in the ‘80s.

Progress in the Corn Belt as a whole

Though land values vary by region, among Corn Belt states as a whole, some farm real estate brokers have noted that the market has a firmness that’s relatively new. It’s caused some optimism among farmers and professionals.

Better commodity prices could lead to better optimism in the farmland market, too. That could spell out opportunities that anyone interested in buying could take advantage of.

Keep an eye on trade talks with China

Still, uncertainty is the theme among farmers and the entire ag industry right now. Some regions have been hit much harder than others by the trade war with China. Cash markets have suffered in some regions and the outlook, as long as no positive progress is made, does not look great.

That’s why it’s critical that landowners and farmers stay up-to-date on what’s going on in the industry. Outlooks on commodity prices and land values can change quickly.

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