FNC News

How can two people look at the same set of data and come up with two different conclusions? The truth is that HOW we look at a situation or challenge can greatly impact our next move forward. It’s no secret we are facing some headwinds in the ag sector, but while some see challenges, others see opportunities.

As we look forward to this fall, we face challenges with lower commodity prices, prolonged higher interest rates, and lower working capital for farmers. But, with every challenge comes an opportunity. After coming off arguably the highest income-grossing years in agriculture, it’s important to remember that this industry cycles over time.

Over the last year, we preached a leveling in land values, but part of that equation was the lower volume of sales on the market. In Iowa and southern Minnesota, the first and second quarters of 2024 saw the lowest volume in five years. Moving into this fall, we’ve seen an uptick in volume, consistent with our normal, pre-COVID seasonal increases. With the escalated volume of land on the market, we’ve seen an overall softening in land values heading into the fall.

2014-2024 FNC Volume of Land SOLD in Iowa and Southern Minnesota

While we are still seeing strong demand for farmland, buyers are cautious and selective when analyzing these purchases. The property's quality (productivity rating), drainage, location, and farmability carry more weight than they did two years ago. This is true over time, in that high-quality farms tend to hold their value for longer in times of distress. Conversely, lower-quality farms, poorly drained and difficult to farm, are seeing a disproportionate softening in value.

Moving forward, understanding the long-term goals for the property, and analyzing the local market situation through the lens of opportunity, will continue to be paramount in attaining a favorable price for the sellers and buyers. Considering the property characteristics and approaching the market with tailored plan, realistic expectations, and appropriate method of sale, will continue to be the determining factors in the success of the sale. Reach out to one of our local agents who understands the challenges in the market but views them through the lens of opportunity! We will continue to move through cycles in agriculture, but farmland will continue to be a strong investment over time, as it has been in the past. Maybe the glass isn’t overflowing like it was two years ago, but the glass is still half…full!