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Producer sentiment on farmland values softens

Farmers are less optimistic about short- and long-term farmland values, according to the latest Ag Economy Barometer.

But, Jim Mintert, director of the Purdue Center for Commercial Agriculture, says sentiment isn’t reflective of recent auction prices.

“As we look the auction reports from farmland sales here in the early part of the fall, they continue to be at record levels,” he says. “Yet you can tell from our surveys that producers are starting to get concerned about how much longer this can go on and I think that is what is really taking place in our surveys.”

He says fewer producers expect low interest rates to support farmland values.

“Earlier in the year, almost 10 percent of the people in the survey said low interest rates were helping to support farmland values and providing one of the reasons why farmland values would increase over the next several years. This month, that dropped all the way to just one percent,” he says. “…we can tell that they’re getting more concerned about what’s going on with interest rates and if that continues, that’s probably going to lead to further softening or maybe bring a halt to the increases.”

Of the respondents who expect farmland values to rise over the next five years, 60 percent said the main reason is non-farm investor demand.

The Short-Term Farmland Value Expectations Index fell five points to a reading of 123 while the long-term index fell seven points to 139. This month’s short-term index is 21 percent lower than a year earlier, while the long-term index has fallen 12 percent.

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

Audio: Jim Mintert