What was once thought to be a steady to firmer land market at the start of 2022 has now been upset and land prices have been propelled much higher in recent months. Sales prices for good cropland in the heart of the grain belt have gone from $10,000 to $17,000 per acre during the fall to auction prices of $12,000 to $20,000 per acre for farmland.
Stronger than expected grain prices into the new year brought farm income expectations up, despite much higher costs for fertilizer and other inputs. Farmer optimism and aggressive bidding for good farmland continued from the fall time frame and has been apparent at land auctions.
Inflation concerns and financial market uncertainties also brought some individual investors into the land market as they wanted a safe investment. With a normal supply of land for sale on the market and good demand, farmland prices were steady to firmer at the start of 2022.
Then the world and the global food and ag economy were shocked by the unheard of attack on Ukraine by Russia. Massive uncertainty reigned and prices for commodities of all types soared. Global supplies of food and fertilizer suddenly became a primal concern and talks of maintaining or increasing production of food and fiber became more prevalent. This shock is on top of production concerns already coming into view in the United States from widespread drought conditions at this time prior to spring planting.
The importance of a secure and adequate food and fiber supply has now taken center stage throughout the world due to trade disruptions and possible fertilizer shortages. The United States, as the world’s most productive grain and livestock supplier, comes to the forefront for world trade now and in the future.
Farmers realize the potential and are therefore willing to bid up land prices in order to control more acres for the future. Individual investors are realizing this too and also that farmland is historically a safe, competitive investment in times of financial and global uncertainty. Current events and the outlook for the next few years are propelling land prices at the start of 2022.v