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Demand for land is on the rise, with many factors at work to broaden the demand picture.

Willie Vogt

February 9, 2021

3 Min Read
Aerial view of farm land
MAINTAINING VALUE: Land prices stayed strong through soft crop prices, thanks to government payments and investors. Even the pandemic added strength as a wave of urban buyers sought farmland for the first time.Nicholas Smith/Getty Images

Randy Dickhut shares that Farmers National Co. is getting more calls about buying land and that the phone started ringing more as 2020 wound down. Dickhut is senior vice president of real estate operations at FNC. From his perspective, different factors have been at work to bolster land prices through tough times, and now new forces may be holding sway.

"I think the underlying factors that have maintained land prices over the last several years are low interest rates, and a low supply of land available," Dickhut says.

When government payments like Market Facilitation Program and Coronavirus Food Assistance Payment checks started coming in, that got farmers thinking there were opportunities in the land market. Then crop prices started rising.

But there were other factors at work in the land market in 2020, too.

"We started getting calls last summer from people who had never owned land before," he says. "They were looking for some lower cost, lower quality land they could afford to get into."

Dickhut explains that with the pandemic, there were people living in urban areas who wanted some land in the country as a kind of safe retreat. He adds that people are more engaged in the food supply chain, too, and became interested in land as a long-term investment.

The pandemic has had impacts across society and Dickhut says he believes this trend of buying in the country will continue. Add in that demand for higher-producing farmland remains strong, and the land market has strength. “Values for good cropland are strong right now with more farmers stepping up to buy as well as a growing number of individual investors. Buying interest from farmers has increased as they anticipate a better income year in 2020 than once thought,” he says.

With the overall supply of good farmland limited, Dickhut notes that the dollar amount of land that Farmers National Co. is currently selling for its clients is near record levels of $300 million. And while it is less likely that 2021 will bring more government checks, rising commodity prices should set a solid base for land demand and price strength. Active demand for good cropland by farmers and investors will continue for now, Dickhut predicts.

New uses for land

Farmers are often looking for more land to farm, and investors still see land as a solid financial choice, especially with interest rates so low. But there are other factors that could weigh into that individual investor interest in the future. Open farmland has more uses than just for crops in the future.

“In our upcoming landowner workshop series, we talk about sustainability and technology used in production agriculture and how that’s changing,” Dickhut says. “And we'll talk his year about other ways you can earn income on your land.”

Those new ways, which also catch an investor’s eye, include carbon credits for timber, hunting leases and renewable energy projects. The renewable energy angle, provided the land is in the right location, can include windmill leases or income from solar energy production.

“That’s part of the change as individuals can capitalize on new income streams for their land,” Dickhut says.

Those landowner workshops aren't usually for farmers, he explains. Instead, they are for non-operating landowners who may have inherited land, or bought rural land for the first time. It’s their opportunity to learn about trends impacting land use. “These meetings are aimed not at investment funds but at families who may be several generations from the farm,” Dickhut says.

As for the future of land prices? “Calls from buyers and sellers come in daily at Farmers National Co. Interest in land and ag land in particular grew in 2020. Looking ahead, if nothing unexpected happens to challenge the current land market, land prices will continue to firm up in 2021,” Dickhut says.

About the Author(s)

Willie Vogt

Willie Vogt has been covering agricultural technology for more than 40 years, with most of that time as editorial director for Farm Progress. He is passionate about helping farmers better understand how technology can help them succeed, when appropriately applied.

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