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Stability of farmland market continues to surprise

The stability of the farmland market continues to surprise many people.

Nathan Kauffman, an economist with the Federal Reserve Bank of Kansas City, says it’s a matter of supply and demand.

“There has been sufficient demand for land at a time when there still has just not been a lot of land being sold,” Kauffman says. “If that environment were to change and, for whatever reason, we were to start seeing more land being put onto the market, then we maybe question whether or not the demand that is there is strong enough to keep prices at the level that they’re at.”

American Bankers Association economist James Chessen says a recent survey of ag bankers shows they expect some more slippage in farmland prices in 2020, but nothing major.

“There seems to be a fair amount of positive feelings about land values—that they seem to be okay,” Chessen says. “Now what that means is there’s an expectation that they’re likely to go down, but not as much as people anticipated.”

Chessen says land value expectations vary by region. But he says, in general, ag bankers expect more property to be offered next year, which could put more downward pressure on prices.