How is the Value of Farmland Changing in 2023?

By Hurdle Land & Realty

We've all been hearing about rising inflation and an upcoming recession in the news recently. From the COVID-19 pandemic to the Ukraine-Russia war, we're living in an unprecedented time affecting industries across the board. But how exactly are current events affecting farmland prices now and into the rest of the year? Here's a look into how the value of farmland will change in 2023.

What are the Biggest Changing Factors?

Various contributing factors have driven farmland values up in recent years, especially in 2022. On average, cropland values in the US increased by 14%, with increases as high as 30% in certain Midwest farms. That's a significant rise compared to the average of 5.6% yearly since the 1970s.

The most significant influence on farmland values right now is commodity prices. There are many different reasons why various commodities have been increasing in price lately, but one of the biggest causes is the Ukraine-Russia war. Ukraine is a huge producer of wheat, soybeans, barley, and corn. The war has disrupted the production and transportation of these goods, shifting the responsibility of meeting demand to other countries. This is good news for US farmers because they can find better profits by growing these crops. However, the Ukraine-Russia war is also causing other problems for US farmers at the same time.

They can't keep up with crop production with the same productivity without proper fertilizer. The Russia-Ukraine area is also a significant source of natural gas, a necessary ingredient in the production of fertilizers. The war also affects the rest of the world's natural gas supply. In addition, supply chains are still recovering from COVID-19 disruptions, and hurricanes near pipelines in the Gulf area impede the availability of affordable fertilizer for farmers.

High fuel costs, Midwest droughts, and government funding toward farming affect farmland values in their own ways. The overarching trend is increased commodity prices and land values, which can be both good and bad for the everyday farmer.

What Does this Mean for Farmers?

The land industry will likely become more stable in 2023 and level out in prices while other industries experience recessions. Farmland values may rise or drop a little, but nothing will cause significant spikes as the sector reaches a plateau.

Due to the steady rise in values, farmland investments have been far more attractive to investors than bonds or treasuries in recent years. After all, the world population is continually growing and demanding more food. Even the improved quality of life among the existing population allows consumers to have more money to spend on food.

Luckily, according to Farmers National Company, 75% of farmland will be purchased by traditional local farmers instead of investors. Rising land values can make it difficult to enter the market, but it is also a worthy investment for those that do. This means 2023 is great for farmers looking to expand and increase their investment portfolio. Hurdle can help you take advantage of the high value of farmland through easy owner financing and a low fixed interest rate. Don't miss out on the opportunity to own land in 2023. Reach out to us today!