Farmland Prices…Still Increasing

According to Steve Taff, economist with University of Minnesota Extension, farmland prices have been rising steadily since 1990, and have peaked at a state average of over $3,500 per acre in 2010. Since 1992, Taff has conducted an annual farmland appraisal in coordination with the 100-year study organized by the University of Minnesota.

“There are two ‘drivers’ for high land prices,” Taff said, “high corn prices and low interest rates.” If crop prices, especially corn, remain high and interest rates on treasury bills remain low, Taff forsees the potential for land prices to continue to appreciate.

As a result of these two factors, buying high-priced land may be attractive to many people. People may view high corn prices as an incentive because of the potential for increased revenue, while low interest rates make it much easier for producers to get loans and make the payments.

“No one knows, that’s the short answer as to whether these record farmland prices will soon drop,” Taff said.