Farmland prices and rents in Midwest climb as farmers seek to expand amid booming agricultural economy

"Across the Midwest, prices to buy and rent farmland are climbing as demand is driven by rallying grain markets, historic government payments and low interest rates, according to economists, agricultural lenders and land managers," reports Jesse Newman of The Wall Street Journal. "The battle for farmland is playing out in small town community centers, online portals and parking lots, where . . . auctioneers are peddling parcels of land to farmers eager to cash in on the best commodity prices in nearly a decade. They are also presiding over intense jockeying for fields that can test the fabric of rural communities as a shrinking set of growers compete for control of the nation’s prime soil."

Some parcels of land are selling at or above prices in the farm boom almost a decade ago, say farmland managers. "U.S. farmland values surged in the decade leading up to 2014, more than tripling in big farm states like Iowa and Nebraska, according to U.S. Department of Agriculture data. By 2020, however, land values in those states had fallen by about 15%, pressured by a drop in crop prices that cut farmers’ incomes and drove some out of business," Newman reports. "Now, a sharp turnaround in the farm economy is breathing new life into the land market. Farmland values rose during 2020 as soaring grain prices last fall revived farmers’ fortunes, according to February reports from three regional Federal Reserve Banks. Land prices in the Chicago Fed region, which covers parts of Illinois, Indiana, Iowa, Michigan and Wisconsin, climbed 6% last year, the largest such increase since 2012, the bank said."

An agriculture economy roundup from the University of Illinois' Farm Policy News illustrates the trend with charts and links to numerous reports. The trend is also reflected in rural Midwestern bankers' record-high sunny outlook on their local economies, compiled in Creighton University's Rural Mainstreet Index.