Locating and acquiring farmland can be quite a fickle process. The general flow of land sales is constant, yet local opportunities can still be sparse at times.
Rented farmland also changes hands on a regular basis. According to a Farm Futures survey conducted earlier this year, 54% of respondents said they were ready to stop renting land if cash rents became too costly. And only 4% of respondents said they would be willing to use Coronavirus Food Assistance Program payments to increase bids for acreage, opting instead to invest in better seed, fertilizer or nutrient technology on their operations.
Even though commodity prices continue to struggle, land values have been very stable this past year. According to a survey from the Seventh Federal Reserve District, the value of good farmland in the heart of the Corn Belt was steady to slightly higher between July 2019 and July 2020. Respondents of that survey reported no change in Illinois and Iowa land values during that time, with a 4% bump for Indiana.
That stability is largely expected to continue in the near term, according to the summary report, adding that “79% of responding bankers projected no change in farmland values for the third quarter of 2020.” And 20% projected them to decrease, while only 1% projected them to increase.
The biggest question farmers face when looking for new land is understanding exactly how profitable that ground could be. Ag tech startup Cibo hopes it has a solution that can help with this process.
“We help people find and evaluate land they don’t know about before they rent or buy it,” explains CEO Dan Ryan.
Cibo folds in data from multiple sources to allow users to take a deep look into how various factors affect potential yields on a given field. That includes inputs, soil conditions, environmental impacts (e.g., nitrogen leaching) and more. Ryan bills the product as “Zillow for farmland.”
“Our thesis was while this has been done in home real estate for many years, it hasn’t yet made
it to the ag space,” he says.
To make the yield simulator work, Cibo had to validate thousands of fields to determine the technology’s accuracy, and the company interviewed hundreds of farmers to create a table of regional management practices so it could populate the simulation with so-called “inferred production practices.”
“It’s essentially a what-if calculator that we’ll always be fine-tuning,” Ryan says.
But whether you use a higher-tech solution or a simple pencil and paper to make decisions on renting or buying new ground, be sure to take a lot of care into those choices, advises Dale Lattz, research associate with the University of Illinois.
“It’s a big percentage of the cost of corn and soybean production,”