Farmland Values Constrained by Falling Income, Pandemic

Farmland Values Across the Midwest and Plains Steady or Lower Than They Were Last June Under the Weight of the Coronavirus Pandemic and Fears of Declining Farm Income


By Chuck Abbott, Successful Farming - 6/23/2020


Farmland values across the Midwest and Plains are steady or lower than they were last June under the weight of the coronavirus pandemic and fears of declining farm income, said the largest U.S. farm management and real estate sales company. “The land market became more cautious in the areas with dairy, livestock, and ethanol as these industries endured mounting bad news,” said Farmers National Co.


Separately, ag lenders and land experts said they expect farmland values in Iowa to decline by 2.3% by November even with an improvement in market prices for corn and soybeans, the two major crops grown in the state. Land values would decline by an additional 1% by November 2021, according to a survey conducted annually for the Soil Management and Land Valuation Conference.


Land accounts for roughly 80% of farm assets and in many cases is the foundation of a farmer’s finances. Farm debt is rising and measurements of the sector’s financial health, such as the debt-to-equity ratio, are worsening although still quite manageable by historical standards. The FAPRI think tank estimates that farm income will decline by 3% this year, despite record-setting government payments, and then plunge by 12% in 2021.


When the coronavirus intensified earlier this year, the land market “hit the pause button as buyers and sellers slowed activity,” said Farmers National, based in Omaha, in a newsletter. Sales prices per acre are down in Illinois, Indiana, Iowa, Nebraska, and South Dakota, it said, and unchanged in Kansas, Michigan, Minnesota, Missouri, North Dakota, Ohio, and Oklahoma...