#United States #Real Estate #Omaha #Farmers National #Ag Land

Current Trends in Agricultural Land Market

The agricultural land market is experiencing a significant imbalance, characterized by a notable increase in motivated buyers compared to the limited number of sellers. According to Farmers National Company, this dynamic is largely driven by various economic pressures affecting farm operations, yet land values remain notably stable across the Midwest.

Despite the challenges posed by lower net farm income, fluctuating commodity prices, rising interest rates, and surging input costs, land values have maintained a consistent trajectory. Although many reports suggest a slight downturn or stability in land values relative to production expenses, the overarching resilience of the land market speaks volumes about its capacity to uphold the high valuations that have characterized the last five years.

Paul Schadegg, Senior Vice President of Real Estate Operations at Farmers National Company, comments, "The motivations driving buyers today are influenced greatly by their mindset and the ensuing demand. Farm operators are, by far, the primary purchasers of agricultural land. Their focus is on reinvesting within their agricultural operations, expanding their enterprises, and optimizing the use of modern agricultural equipment. Additionally, the location of the land plays a pivotal role, especially since many parcels have remained within families for generations, making them less likely to be available again once sold."

As we observe the age dynamics within the farming community, many current farmers have witnessed the peaks and troughs of agricultural markets over time, leading to a profound understanding of land as an invaluable asset for both operational and investment purposes. Schadegg notes, "We foresee that operational farmers will continue to dominate land purchasing as we transition into 2025. The state of the agricultural economy will ultimately dictate whether the percentage shifts upwards or downwards."

The segment of land investors comprises the second largest group of buyers. This includes individual investors, investment groups, and land investment funds, with a distinctly business-oriented mindset. Unlike farm operators, these investors typically lack emotional attachments to land purchases; decisions are primarily based on projected return on investment and anticipated appreciation. The goal here is to enhance portfolios, seize opportunities in productive regions, and boost return on investments in a declining agricultural landscape. Many of these investors may not have lived through the cyclical nature of agriculture but grasp the long-term potential of land.

Adding to the complexity of the landscape, the total number of land listings has seen an average decline of 25% compared to the active and escalating value market witnessed between 2020 and 2023. This evident shift is well encapsulated by the fundamental economic principle of supply and demand. Long-term landowners acknowledge the value appreciation of their holdings, resulting in a tendency to retain such assets rather than sell, thereby further constricting the available supply.

As the current landscape remains filled with motivated buyers—both those operating farms and land investors—there is cash ready to be deployed to advance operations or expand portfolios. In the past three months alone, Farmers National Company has successfully facilitated $223 million in land transactions across the Midwest, conducting 123 sales through various public auction methods. As we approach the first quarter of 2025, the real estate activity is brisk, with above-average levels of both auctions and negotiations for traditional listings.

Schadegg expresses optimism for the future, stating, "With positive signals underlying the agricultural economy, there are promising opportunities forthcoming for stakeholders in agricultural production."

Farmers National Company operates as a top-tier provider of landowner services across the nation, managing nearly 5,000 farms and ranches across 30 states, encompassing over 2 million acres of land. Over the past five years, they have transacted approximately 5,250 properties, achieving a staggering total of more than $3.25 billion in real estate sales. The company also offers a range of services, including energy management, appraisals, insurance, and consulting, making them a pivotal player in the agricultural real estate market.

For further information about Farmers National Company and their extensive array of services, visit Farmers National.