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Forces Shaping Farmland Values


Frontier Farm Credit and Farm Credit Services of America (FCSAmerica) are co-sponsoring a webinar series, Two Economists and a Lender. This January installment, featured Agriculture Economic Insights (AEI) co-founders David Widmar and Brent Gloy and Kirk Manker, our chief appraiser, discussed the latest on farmland values.

Below are highlights from their discussion, as well as the full webinar.


Whether you own, buy or rent, farmland plays a major role in the finances of any operation. Land accounts for at least 80% of all farm assets and 60% of debt, according to Brent Gloy and David Widmar. As an annual cost, farmland accounts to roughly 35% of a producer’s budget.

The importance of this investment isn’t lost on producers; few other topics generate as much interest among the farmers, Gloy said. As part of our ongoing webinar series, Gloy and Widmar discussed trends in land values with Kirk Manker. The webinar followed the most recent update to the Associations’ biannual study of benchmark farmland values.

Big picture. Farmland values, as shown in the chart below, have dropped significantly since the real estate market peaked in 2013. This isn’t unique to the states tracked in the Associations’ benchmark farmland study.  Widmar noted that Indiana and other areas of the Corn Belt have seen the same trend.


Change from peak





South Dakota


Cropland values from market’s peak to most recent comparable quarter. (July 2019 for Iowa and Nebraska, January 2020 for South Dakota.)

The last time farmland values dropped five consecutive years was in the 1980s. In both periods, farm income fell at a similar rate. Farmland values generally align to income expectations, Gloy said. This time, though, land values are benefitting from at least a couple factors. 

“In this last decline, what we’ve seen is that interest rates have fallen . . . so it’s cushioned some of that blow of lower income expectations. In the 80s, it was the opposite – interest rates were shooting much, much higher. And that really exacerbated the situation,” Gloy said.

“The other thing we had in the 80s was the local supply-and-demand issue. Tremendous amounts of farmland were pushed onto the market at a time when nobody wanted to buy it. So you had incomes falling, interest rates rising and local supply and demand completely out of whack. That results in a huge, huge downward correction.”

More big picture. While values are off their peak values by as much as 20% and 23% in Iowa and Nebraska, respectively, farmland remains a good long-term investment, as evidenced by 10-year gains in the chart below.


Ten Year Change (%)

Iowa (21)


Nebraska (18)


South Dakota (23)


Wyoming (2)


(The number of benchmark farms in each state is noted in parentheses.)

Back in 2012 and 2013, Gloy recalled, few people viewed record commodity prices as sustainable.

“Relative to where we were 10 years ago, this (current farmland value) is some significant appreciation,” Gloy said. “It’s important to put that in perspective.”

Shorter-term trends. Farmland values are shaped by two major forces – the macro, such as national commodity prices, farm income and interest rates, and the micro, including local yields, cash prices and cost of production, Widmar said. The 12-month changes in farmland values below, as tracked by FCSAmerica and Frontier Farm Credit, underscore the importance of looking at what is happening in your state, he said.  



One-year change


One-year change

Iowa (21)



Eastern Kansas (7)



Nebraska (18)



South Dakota (23)



Wyoming (2)



Benchmark farmland values, January 2020 compared to the same period last year.

At a local level, Manker said, the Associations continue to see solid demand for quality farmland. Our data shows that 70 percent of farmland buyers are local, Manker said, and financially stronger farmers seek out quality land in their area. Today’s weaker prices often are associated with marginal or lower quality tracts, he said.

Producers can’t always anticipate when they will have an opportunity to buy quality land to expand their operation. That’s why, Manker said, it’s never too early to prepare for your first or next real estate purchase. Focus on running your operation as a business, including adjusting your cost structure as needed. If a real estate opportunity comes along, you will be in a better position to make the right decision for your operation. 


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