It is often said that farmers are “asset-rich and cash poor.” Nowhere is this more obvious than when it comes to land. It is the most important asset that a farmer has. Without land, nothing else can be accomplished, whether it is grain or livestock production. It is also an asset that comes with an ever-increasing price tag.
In the past year, we have seen many states set records for the price of an acre of land, and the National record was set in Missouri earlier this year at over $34,000 as well. Prices in Iowa topped over $30,000. For years, experts have been saying that these high prices for acres would not last. Eventually, we were going to see a correction. However, we haven’t seen one at all. We are seeing the opposite effect as the numbers keep climbing.
So, when will that price peak and begin to taper off? According to Randy Dickhut, Farmland Specialist with Agricultural Economic Insights, don’t look for it to come down anytime soon. In fact, he is expecting borrowing for farmland purchases to increase even further to kick off 2024.
Add that to the increased interest rates, and we may see a decreased return on investment for those looking to purchase land as an investment.
This may be the route we see to the peak though. Increased operating costs should lead to a decreased amount of income available for land purchases, which should help put some pressure on the market and lower prices.
The thing is, nothing ever goes the way it should. This economy, in general, hasn’t done what we expected it to.
