Midwest farmers continue to face a tale of two markets.
On one hand, the cost of growing a corn crop keeps climbing. USDA recently increased its estimate for corn production expenses following renewed geopolitical tensions.
On the other hand, farmland values remain surprisingly resilient.
“It’s been a very resilient land market here through the last couple of years of tight profit margins. And so I think it is the expectation of the future, combined with some cash that was built up from prior years, that keeps the demand level where it is through this stretch of type profit margins.” According to RD Schrader, President of Schrader Real Estate and Auction Company
He says a recent auction in Wells County Indiana sold for just over $24,000 per acre for the purpose of possible development but even farm operators are buying premium land at premium prices.
He added, “Just last night we were in Allen County and were just a few dollars short of 18,000 an acre, and it was operators that drove the value of that farm, and it didn’t really have any transitional value. It was strictly agricultural value that brought it to nearly 18,000 an acre, which is just as strong as it’s ever been in that pocket.”
The contrast highlights today’s farm economy. Producing a crop may be getting more expensive, but confidence in Midwest farmland itself remains strong.
