

USDA’s latest Land Values survey shows cropland values have held steady over the past year, though insiders warn prices may fall further.
A recent USDA report suggests US farmland markets could be approaching a bottom, according to the director of the TIAA Center for Farmland Research.
In its 2017 Land Values Survey published last week, the US Department of Agriculture’s National Agricultural Statistics Services reported that average US cropland values have stayed flat at $4,090 per acre over the past year.
Regionally, the largest increase in average cropland value was seen in the Southern Plains states, which reported 6 percent growth over 2016 values, while the Northern Plains states posted the largest decrease in average value at 4.4 percent.
Bruce Sherrick, a University of Illinois professor and director of the TIAA Center for Farmland Research, told Agri Investor that the USDA report largely confirmed recent anecdotes he had heard about conditions in US farmland markets.
Sherrick said fluctuations in cropland value for key markets like Illinois and Iowa in the USDA report were minor at around 1 percent, adding that part of the negative sentiment around farmland stems from the fact the market is still readjusting after a period of historic highs earlier in the decade.
“The story isn’t as bad as people thought,” he said. “Everybody is still being grown-ups. Many individuals have substantially pared down their working capital in the sector, but farmland values have quit coming down. In values, the most striking part is that, as everyone has been saying, some sort of a soft bottom seems to be forming.”
However, Shonda Warner, managing director of ag-focused asset manager Chess Ag Full Harvest Partners, told Agri Investor that she thought the market was currently slightly softer than presented in the USDA report.
Warner said that while the annual USDA survey remains the most accurate reflection of the current state of US farmland markets, methodological constraints meant that it often lags behind reality, and that its 2017 findings contradict the downward trend she had witnessed in private appraisals over the past year.
“We’re seeing a lot of distressed processing deals in the market. We’re seeing distressed land situations in the market,” she said. “I personally think that farmland prices, for the most part, traded in 2016 at lower valuations than they did in 2015, so I’m a little surprised at the USDA’s flat numbers.”
Warner added that a true bottom for US farmland prices will rely on the competitiveness of the dollar and recovery in underlying commodity markets.