A Farmland Market on Edge

Image by Jim Patrico

The land market is holding its breath.

“It’s just on edge because of all the uncertainties,” says Randy Dickhut, senior vice president of real estate operations at Farmers National Company.

With sloppy spring weather, difficult growing conditions and volatile trade policy layered on top of weakened farm finances, more land could be headed to the auction block this fall. With more supply on the market, farmland values could face renewed pressure after several years of relative stability.

“Those land values are a key support to the financial condition of agriculture right now,” Dickhut says, adding that tight supplies are one of the primary supports holding up valuations. “If that changes markedly, it changes the dynamic of what’s going on.”


While Dickhut doesn’t anticipate a radical market shift this fall, he thinks this year will create regional, perhaps even local, winners and losers.

Areas that got corn planted have a shot at good profit margins this year, but he cautions that higher grain prices don’t always translate into better revenues, especially if yields take a hit. Other farmers could be stuck with prevented planting and insurance payments that don’t make up for lost revenue.

“We’re watching to see if there are a few more farms that come up for sale due to financial reasons. How many does it take to put a little too much on the market in an area? How cautious will buyers get as we go through the season? There’s capital out there, but how much is there in the neighborhood?”

While Farmers National Company has seen an uptick in financially motivated sales, he doesn’t think it’s a trend. Right now, most sellers are families and heirs that have decided it’s the right time to cash out or retire.


Even if financial stress drives an increase in land up for sale, Dickhut doesn’t think the result will mimic the 1980s. Back then, high interest rates and inflation drove farmers to keep operating until the bank shut them down completely. Their land had already lost so much value, it limited their options.

“Today, we’re seeing that financially stressed producers are more willing to sell off an asset, like a piece of land that they’ve purchased or some equipment, to shore up their cash flow and their financial situation,” Dickhut said. “That land is still a bedrock of the balance sheet.”

Low interest rates and inflation also support the land market.

Yet uncertainties, especially around trade, make the market difficult to predict.

The trade war with China crippled cash markets in certain regions, and the fallout will only get worse the longer it lasts. With other trade negotiations clouding the demand picture and few details about a government assistance program, it’s hard to estimate income.

“No market, no industries or businesses, like uncertainty, and I think that is causing land buyers to be more cautious,” Dickhut says. “I think after harvest, as always, we’ll know a lot more.”

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