Farmland is a stable, resilient asset that weathers economic ups and downs. But even farmland isn’t immune to market fluctuations.

Following the beating we’ve taken in the commodity markets, farmland prices softened, as reported in the 2024 midyear farmland values survey from the Illinois Society of Professional Farm Managers and Rural Appraisers. As we entered the fall farmland market, this continued. Depending on location, land has dipped in the current market as much as 15% compared to prices from the beginning of 2024. 

Although a declining market initially may seem like a setback, it also can present unique opportunities. A down market might be an opportunity to rethink and adjust your approach. Consider these four strategies:

1. Lower estate taxes. There is nothing so certain in life as death and taxes.

If you will have to pay a death tax on farmland, one opportunity a down market offers is the ability to use the IRS six-month Section 2032(a) rule to your advantage. Section 2032(a) provides that the executor may elect to use an alternate valuation date. Under this election, the value of all property included in the gross estate generally is determined as of six months after the decedent’s death. This rule provides a chance to reassess the value of estate assets, which can be crucial when markets are trending downward.

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By reassessing assets at a lower valuation, you may be able to decrease estate tax obligations.

Consult with your tax adviser to ensure everything complies with IRS regulations. Estate tax law can be complex, with numerous potential pitfalls such as misvaluations or missed deadlines that could lead to penalties.

2. Update the estate plan. When farmland values decline, it’s an excellent time to reassess and potentially update key aspects of your estate plan.

Lower valuations can present opportunities to adjust gifting strategies or plan transfers of assets, reducing future tax burdens. Here are specific steps to take:

3. Look to buy. Buy low, sell high. The key to building generational wealth in agriculture often lies in making smart purchases at the right time. A downturn isn’t just a risk — it’s also an opportunity, which can be ideal for those prepared to make a move.

One of the dangers in a declining market is trying to time the exact bottom. Waiting for the market to hit the absolute lowest point can lead to missed opportunities and can prevent you from acting when prices are already favorable.

If you’re thinking about expanding your current operation or adding more acreage to your investment portfolio, a softening market could provide just the opportunity you’re looking for.

4. Adapt selling strategies. Selling during a downward market is challenging, but not impossible.

In a softening market, cautious buyers mean sellers must be more deliberate in their approach. If the only tool you have is a hammer, then all your problems start to look like nails. In a downward market, relying on just one approach can limit your success.

Auctions work best in upward-trending markets where competition among buyers is high. In these situations, it can be impossible to determine the best price for a farm, as competition often drives prices above expectations. However, auctions can still work in a declining market. The depth of the buying pool is shallower, but demand for prime ground can still lead to successful results. In the end, expert knowledge of your farm and the local market is key to obtaining the most value from a sale.

Work closely with an appraiser or a broker to establish a fair and defensible market value for your property.

Selling in a soft market isn’t about waiting for conditions to change. It’s about adapting and positioning your property to appeal to serious buyers. It’s not easy, but with a tailored approach, you can make it happen.

Farmland is a long-term asset. Cycles are natural. It’s all about how you respond to them.