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Supply and Demand in the Ag Land Market Continue to Support Prices
You are here:   Blog  »  Agricultural Real Estate  »  Supply and Demand in the Ag Land Market Continue to Support Prices

November 15, 2021

One of the determining factors in establishing the price paid for ag land in the marketplace is the supply and demand equilibrium. This fundamental economic equation has relevance for the land market and came into play the previous few years when a generally lower supply of land for sale was met with weaker, but adequate demand which provided support for the land price plateau that ensued after the drop-in prices from the 2013 peak.    

  

Over the past twelve months, most areas of the grain belt have experienced an increase in the amount of land sold starting with the additional sale activity last fall. A number of states have seen a ten percent or more bump in the number of transactions while others have had a more moderate increase. Also, more acres and larger tracts have been coming to the market. As an example of the increased land sale activity, Farmers National Company sold over 50% more acres during the past twelve months than last year along with a 10% increase in the number of transactions.  

  

The additional land that came to the market recently was met with increased demand, especially for average to above tillable crop land. Higher commodity prices and better incomes, in part from government payments, propelled grain producers to be more aggressive bidders for farmland than during the past several years. Additional buying interest has come from individuals looking for an inflation hedging investment or the security of farmland. 

  

Land sale activity will be brisk through the end of the year based on the number of auctions booked at this time. The market will soon know if this increase in sales will continue through the winter and into the spring sales season as auctions and listings for that time frame are being or will soon be booked. As long as demand continues as robust as recently, the prices for good crop land should remain stable to stronger. 

Randy Dickhut  

Senior Vice President - Real Estate Operations 

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