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How much higher can farmland values go?

Farmers are relatively optimistic about farmland values despite uncertainty about future increases, according to the latest Ag Economy Barometer.

Jim Mintert is the director of the Purdue Center for Commercial Agriculture.

“Farmers are looking at the tremendous increase in values that have already taken place in the last 12 months, for example, and then asking themselves how much higher farmland could go,” he says.

The Short-term Farmland Value Expectation Index declined to 153 and the Long-Term Farmland Value Expectation Index fell to 152. Although both indices declined, they remain near all-time highs.

He says producers who expect farmland values to rise over the next five years were asked what the main reason is for the anticipated increase.

“Roughly six out of 10 producers in the survey that expect farmland values to rise, said they thought non-farm investor demand was the main reason they expect farmland values to rise,” he says.  “We didn’t expect that. From our perspective, we look at strong farm cash flow and low interest rates as being a primary drivers. So, it was interesting to see this perception among producers that think non-farm investors are driving the market.”  

The Purdue University/CME Group Ag Economy Barometer is a monthly national survey of 400 U.S. agricultural producers.