Location and quality are key drivers of land prices in North Dakota, South Dakota and Minnesota, according to Brian Mohr, area sales manager for Farmers National Co.
“Good-quality farmland normally sells well, as will recreation properties in the right locations. But lower quality farmland saw a decline this past year,” he said in a statement that was part of Farmers National’s mid-season outlook on land values. “We are starting to see increasing signs of financial stress among farmers approaching some of what we saw in the ’90s.”
The stress on farmers varies by area depending on crop yields the past several years. Working capital for most producers is declining with the tighter margins putting pressure on loan repayment capacity.
Despite issues, land values have exhibited an underlying base of strength from several factors including historically low interest rates, low supply of land for sale and adequate buying capital. The other side of the land value equation is seeing increased uncertainties that could weigh down on the land market as time goes by, he said.
More land sales
Across the U.S., Farmers National is seeing more farmland sales by financially stressed ag producers, according to Randy Dickhut, senior vice president of real estate operations.
“Some of these sales are sold quietly and not exposed to the marketplace to get top dollar. Other sales are coming from producers who are pro-actively liquidating a land asset to improve their balance sheet and cash flow. Farmers National is now handling an increasing number of land sales and receiverships for lenders.”
Farm finances, weather, and trade issues are many other factors are affecting land values, according to Dickhut.
“The outcome of these and other unknowns will guide which direction land values will move over the coming months,” he said.Source: Farmers National Co., which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.