Industry experts are scratching their heads over the relatively high price of farmland while commodity prices are still low. The two factors often have a strong correlation between each other.
Farm Futures Dot Com quotes Steve Bruere, President of the land-brokerage firm Peoples Co. of Iowa as saying, “Strong farmland values defy logic in a lot of ways.” He says the fact that there aren’t a lot of farms for sale may be at least partially responsible for keeping prices high. As of November, there were only 150 farms for sale in Iowa, which is considered a low number, less than two farms per county.
Randy Dickhut, a senior vice president with Farmers National Co., says, “Farmland values have dropped in many areas but not as far as some think they could.” He says it would take a “perfect storm” of circumstances for prices to head lower, including crop insurance adjustments, negative changes to tax policy, and mishandled trade policy opportunities. For now, he says drastically lower prices are not likely to happen anytime soon. “We’ve seen mostly stable prices so far,” Dickhut adds, “and there’s interest in buying land out there with a relatively low supply.” He did say that low commodity prices may continue to apply short-term pressure to land prices.
From the National Association of Farm Broadcasting News Service.