Barometer: producers are optimistic about farmland values
Producers remain bullish on farmland values despite uncertainty in the industry, according to the latest Purdue University/CME Group Ag Economy Barometer.
Purdue’s Jim Mintert says the sentiment is reflective of farmland prices in 2021.
“All the farm sales that we’ve been hearing about from the auctions, for example, are either record high levels or near-record high levels,” he says. “
He tells Brownfield there are several reasons for the optimism among farmers.
“One, people think farmland is a good value from an investment standpoint. Two, they’re probably inhibited from making investments in some other aspects of the farming operation in things like farm machinery because of the tight inventories,” he says. “Third, the lack of good investment alternatives in terms of things that are relatively stable like bonds. Rates on bonds still remain low and I think that has also fueled demand for farmland both from farmers and non-farm investors.”
The Long-Term Farmland Value Expectations Index set a new record in the latest survey with a reading of 161. The Short-Term Farmland Value Expectations Index rose slightly and was just three points below its record high set last spring.
Forty-three percent of farmers survey expect higher farmland rental rates and 55 percent of farmers said they expect rates to remain unchanged.
Audio: Jim Mintert