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Producer sentiment about farmland values shifts

Producer sentiment about farmland values has shifted, according to the latest Purdue University/CME Group Ag Economy Barometer.

Jim Mintert, director of the Purdue Center for Commercial Agriculture, says although farmland value indices remain positive, sentiment has declined over the last year.

“If you look at the indices over the last year, you can see a decline in the indices, so people are less confident farmland values are going to go up in the next year and five years than they were a year ago,” he says. “If you look at the raw responses to the question where we ask people about their farmland expectations over the next year, you can see a change in sentiment starting to show up there. A year ago, only six percent of the people in the survey said they expect to see lower farmland prices in the upcoming 12 months. In this month’s survey it was 15 percent. That’s still a low number, but it’s a change and you can see a consistent month-to-month increase in the percentage of people telling us they think they’re going to see lower farmland prices. And on the other end, the percentage of people saying they expect to see higher farmland prices was at 59 percent and this month that was down to 39 percent.”

The Short-Term Farmland Value Expectations Index fell five points to a reading of 124, while the Long-Term Farmland Value Expectations Index declined from 144 to 140. People are still cautiously optimistic about farmland values continuing to increase in the aggregate.

He tells Brownfield producers are less confident farmland values are going to keep increasing.

“I don’t think the farmland value increases are over based on our survey but when you look ahead and think about what it will look like a year from now or in early 2024, there are some clouds on the horizon and the big one is interest rates,” he says. “

Among producers who expect farmland values to rise over the next five years, just over three-fourths said a combination of non-farm investor demand and inflation are the main reasons they expect to see values rise.

The monthly national survey of 400 U.S. producers was conducted Dec. 5-9.

Audio: Jim Mintert