Farmland sales have remained strong through 2023 but typically slow during harvest season when farmers are busy elsewhere. But Paul Shadegg, senior vice president of real estate operations with Farmers National Company, says sales aren’t slowing as much as in the past year.
Shadegg says, “With those pressures of increased interest rates and the input costs operators had through the growing season in 2023, our concern was that we would see some people step back, and maybe we would see less competition for land, a downtick in demand, which was going to result in some decreased values. What we’re seeing is almost the opposite. The optimism is there, and then what we’ve seen in our recent sales is just a continued demand for land.”
Farmers National has seen some exceptional prices for land during the year. “A good example was some good quality farmland in northwest Missouri that, over the last year, would have sold for in that $10 to $12,000 range. Because of competition, those better tracts went over 14,” according to Shadegg.
He says technology means farmers don’t have to stop what they’re doing to participate in a land auction. Shadegg says, “Historically, I look over my long career in real estate and usually what we did is you could almost take a vacation between May and until harvest was over, maybe in November, and it’s just not that way anymore. And I have agents that say I want to schedule this auction, but we want to wait till after harvest because we’re afraid guys won’t show up to bid. And I said that land that’s coming up for sale, those guys are not going to miss that opportunity, number one. And there are so many tools out there today, including simulcast auctions and online options, for bidding. We had a guy tell us just the other day he was out in the field driving a semi hauling corn to town, and he bought the farm driving down the road on his phone.”
Shadegg says if interest rates keep climbing, it will eventually start to affect demand for land.
He says, “The interest rates are bound to have an effect at some point. I’ve heard different rationales, guys that have been in the business a long time, they say interest is costing me nine percent for an operating note, but I remember what it used to be 18, so it’s a matter of perspective. If you’re used to having interest rates at four percent, and now you’re having to look at eight to nine, that’s a concern. As we burn through equity and borrowing becomes more important, It’s just going to become a bigger part of the equation. And at some point, we’re going to find that tipping point.”