The days of sky-high farmland values are behind us—at least for now. Mike Walsten, LandOwner editor, says a correction in land values is under way. That was Walsten’s message as he presented at the 2015 Top Producer Seminar.
“I think we’re in the second year of a five-year correction in land values,” Walsten says. “During that total time, I see land values going down 20% to 30%.”
He says that will be the case unless some type of crop problem causes corn prices to shoot back up. “If you put the profits back in corn, you’ll have land values go up,” he says.
The main reasons farmland values are softening are:
- Decline in commodity prices
- Net farm incomes declining
- Supplies relatively tight
“Even though we had a strong run-up in land values, not a lot of land was being sold,” Walsten says. “We used to turn over 3% to 4% of a county’s acreage base; it’s around 1% now.”
Regardless of the current economic changes, Walsten doesn’t think this decline in land values will resemble the crash of the 1980s.
“Farm balance sheets are strong, fewer farmers are highly leveraged and farmers have had more time to get prepared for the tighter cash flows,” he says. “Right now, based on what we know with interest rates going up and net farm income going down, it is a manageable correction and it will take about five years to get through.”
To read more news and find additional information on the Top Producer Seminar or Tomorrow’s Top Producer events, visit www.TopProducerSeminar.com.
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Premier Sponsors: Advance Trading, Apache Sprayers, BASF, Bayer CropScience, Cargill, Case IH, Dow AgroSciences, DuPont Pioneer, ESN, Farmers Business Network, Firestone, John Deere, New Holland, Top Third Ag Marketing, Verdesian
Co-Sponsors: CliftonLarsonAllen, Conservis, The Gulke Group, K-Coe Isom, Soybean Premiums, Wyffels Hybrids
Supporting Sponsors: FarmLink