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2019 To Be a Pivotal Year in Ag
You are here:   Blog  »  Agricultural Real Estate  »  2019 To Be a Pivotal Year in Ag

October 15, 2018 

 

Those involved in and around production agriculture know that net farm income in the US has declined sharply from the highs of a few years ago. Uncertainty spread in 2017 as producers looked at lower commodity prices and unknown production. But there was a glimmer of good news brought about by better crop yields than expected, which boosted cash flow and incomes enough to stabilize profits for most. The bit of optimism was evident in the land market as prices bid for good cropland held steady and even increased in some areas.

2018 started off looking somewhat better than the preceding years and there was hope for better grain prices through planting time. But then the tariff issues and the prediction of good yields took a toll on commodity prices that deflated expectations for the current season. The year is not over and final tallies of yields and incomes are yet to come. Overall, it does look like US ag will weather the fifth year of what was expected to be a three-year downturn. There are producers who continue to face financial stress, but in total, the volume of non-performing ag loans is manageable at this time.

Looking ahead, 2019 may be the pivotal year that everyone has been expecting. Will 2019 be the year farm income bottoms and starts to move higher due to world issues or the size of world crops? Will land values continue to hold steady or will there be a move down caused by various factors such as higher interest rates, more land for sale on the market, tariff issues that go on too long, or continued financial stress in ag that turns land buyers more cautious? Time will tell as we head through next year. 

 

Randy Dickhut 

Senior Vice President - Real Estate Operations  

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