From the Farm: Land Values

Agriculture

GENESEO, Ill. (WCIA) – A lot of people are looking to buy farms this year, which in turn is pushing land prices higher with each sale that is reported.

As the saying goes, the planets have all lined up for the factors that foster demand and higher prices for farmland. That’s the analysis of Troy Coziahr of Hertz Farm Management at Geneseo.

“There’s a lot of reasons behind it and a lot of indicators that help drive that,” Coziahr said. “Increased commodity prices, obviously, increased net farm income, low interest rates. If you go back a few years, there has been a dearth of farms available, primarily estates sales, and there’s some other things too; and all of those things have kind of come together to push things in a positive direction and that’s not very common.”

“It’s common to have two, maybe three of those things altogether pushing, but usually there is something else that is holding it back,” Coziahr continued. “Right now, all the indicators are pushing positive and so it’s going to be interesting to see how long we are going to be in this path.”

Will this carry through the winter and into spring, the farming season?

“I think most of the fundamentals are still pretty strong, there’s some worries. Obviously, the increase in inputs will probably be pulling hard on farm income. With the inflation situation right now, there’s kind of a consensus that interest rates are going to be going up,” Coziahr said. “So those things are going to pump the brakes a little bit, but you don’t really know. It’s yet to see how hard those things are going to drag on that upward trajectory.”

Coziahr said farmers are buying upwards of 80% of the land for sale to farm themselves.

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