FNC: Ag Land Values Likely to Continue Gradual Decline in 2016

A softer agricultural land market will continue in 2016, with values for high quality land holding steadier, while lower quality land values decline, states Farmers National Company (FNC). In a press release from the firm, FNC says that despite lower land values scattered across many regions, land values in general will remain historically high when compared to long-term trends.

“Lower grain and livestock prices are a major factor in the current measured decline in land values,” said Randy Dickhut, vice president of real estate operations for FNC. “As net farm income continues to fall from the 2013 peak, we expect to see this trend in many agricultural regions of the country.”

Price stabilization will carry over into 2016 for some regions as landowners hold on to the high-value land. The supply of land available for sale increased slightly during the last quarter of 2015, but has remained lower than normal. The demand for agricultural land has turned more cautious.

FNC statistics indicate positive long-term economic trends, even with the current softening of ag land values. The current land value trend may encourage new buyers to enter the market or existing investors to expand portfolios, the firm, states.

“As the land market experiences a gradual decline, values remain much higher than just five to seven years ago, due to the positive long-term demand for food and fiber,” Dickhut said.

The chart below shows the estimated value of farmland as of January 2016 versus a year earlier on a state-by-state basis.

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