Farm Credit Services of America (FCSAmerica) and Frontier Farm Credit and Farm Credit Services of America (FCSAmerica) are co-sponsoring a webinar series, Two Economists and a Lender. Our January installment featured Agriculture Economic Insights (AEI) co-founders David Widmar and Brent Gloy and Danielle Peebler, vice president, appraisal. The webinar recording from January 23 is available.
Watch as we dig into recent and historical farmland values and what they mean for producers in 2025.
Understanding the Benchmark Project
In this webinar, we discuss our Benchmark Farmland Values Report , which includes appraisals of 93 representative agricultural properties – cropland, pasture and mixed-use -- in an eight-state region. These benchmarks properties are appraised twice each year, January 1 and July 1, to provide a consistent, apples-to-apples comparison of farmland values over time.
With data dating back to 1988, our benchmark report offers valuable insights into the trends and overall health of the real estate market, helping both lenders and farmers make informed decisions.
Regional Market Dynamics: Iowa, South Dakota, and Beyond
The conversation revealed some interesting regional differences in farmland values. Iowa, traditionally seen as a bellwether for the farmland market, has seen a steady decline in land values. However, the drop has been gradual, which offers a level of predictability for producers.
South Dakota, on the other hand, has seen strong demand for pastureland as a result of the booming cattle industry. According to the team, pastureland near key cattle operations is commanding a premium, and some regions are still seeing prices rise. This suggests South Dakota could be experiencing the tail-end of a land value boom.
Cropland vs. Pasture: Diverging Trends
The market for cropland and pasture evolved in distinct ways in 2024. Trends for both land types were driven by both demand and location.
For cropland, there has been a noticeable slowdown in land sales, with some areas experiencing up to 30% fewer transactions. Buyers are being more selective, especially as commodity prices remain unpredictable and margins stay tight. The slowdown is also attributed to fewer properties hitting the market.
The strength of the cattle industry has led to increased demand for high-quality pasture, especially near established cattle operations. When pasture becomes available, producers are willing to pay a premium, particularly if the land is close to their existing operations. Public auctions, which tend to drive prices higher, are still a common method for pasture sales, making up over 50% of land sales in Iowa.
The Auction Market: Slower, But Still Strong
While overall land sales have slowed, the auction market remains a major driver in land transactions. In Iowa, public auctions account for a significant portion of land sales, and continue to attract attention. This trend has helped prevent sharp declines in land values.
Some brokers are recommending sellers list their properties for sale instead of taking them to auction. This strategy allows for more exposure and potentially better sale prices, though it requires patience. The slower pace of sales means that sellers may have to adjust their expectations or be prepared for longer timelines.
Looking Ahead: Key Factors to Watch for in 2025
Several factors are likely to shape the farmland market in 2025:
Cash rents: Despite talk of a slight decline in cash rents, this trend is not yet significant. Rent adjustments are expected, but they won’t be drastic.
Interest rates: The current interest rate environment is stable, with no major fluctuations expected in 2025. For buyers, this means more certainty in financing options, allowing for strategic decisions around land purchases without the risk of volatile rates.
Strategic Advice for Producers in 2025
If there’s one piece of advice the experts agreed on, it’s the importance of being strategic when making land purchases. While farmland remains a solid investment, producers should continue to make smart, financially sound decisions that align with their long-term operations. For those looking to expand, it’s important to evaluate each potential purchase carefully and ensure it fits into the overall goals of the business.
As the farmland market continues to evolve, the need for strategic, informed decisions is more critical than ever.
