American farmland values falling nationwide as losses mount
Investors flee "chaotic" market coast to coast
Bullets:
US farmland is seeing steep declines nationally. In every region surveyed, the most productive and highest-yielding farmland has fallen between 5 and 15%. In many areas with less-than-ideal tillage or water supplies, the losses are much higher, at over 30%.
This decade was thought to be one of the best ever for North American farmers. The population across the developing world is still growing, and urbanizing, and earning higher incomes. All these factors point to higher food demand, and for higher quality, and at higher prices
American farmland, agricultural equipment, and even indoor farms were believed to be cannot-fail investments themes, and attracted tens of billions of dollars in private equity capital.
But investors ignored three global realities. Chinese- and Indian-built farm equipment is of comparable quality but at far lower cost, and led to dramatic increases in farm productivity across the world. China's Belt-and-Road Initiative investments came fully online, and linked the most productive farmland across the world to modern logistics hubs. And the BRICS group of nations has developed a trading and banking system that allows their countries to buy and sell, and are feeding themselves with their own record harvests.
Major crop prices are falling, and margins for high-cost farms in the US, Canada, and Europe are now negative. Rising interest rates provide more attractive investment options for private capital, while sharply raising borrowing costs.
Report:
This decade and the next was supposed to be a golden age for North American farmers. The world population is growing, with billions of mouths to feed, and most of the growth is in the world’s cities—and that means people are leaving farming to move to cities. As the developing world makes more money, they will demand more food, and of better quality. And the only way to meet this booming food demand, is for American farmers to become more productive and efficient. So investors bid up the stocks of farming equipment manufacturers. Silicon Valley investors poured billions more into indoor vertical farming, believing that would be critical to the future and a can’t-miss investment. And private equity pools formed to buy US farmland, which could only go up in value as American farmers would bridge the giant gap between agricultural supply and the demand for it.
That was the investment theme, and it was fatally flawed from the beginning. It ignored, first of all, the fact that Chinese and Indian farming equipment is of comparable quality to Western brands at a far lower cost, and that farmers across the world would buy equipment from China and India, and see hyperbolic increases in their own farm productivity. Then, it ignored the giant Belt and Road investments into logistics across the developing world, which are now online. The BRI railways and port facilities now bring agricultural products quickly to consumer markets elsewhere. And it ignored the development of BRICS group of nations, the natural resources economies who grow most of the world’s food, and consume it, and the motivation of these countries to do much more of that business among themselves.
These realities are obvious to almost everyone who lives outside North America and Europe, because we see falling food prices at a time in history when everyone assumed they would be going up instead. Russia and Brazil and China and and a score of other places are seeing record harvests, and easily meeting demand when everyone believed they wouldn’t be able to.
We’ve had some coverage on these topics, and how the thesis is now unraveling in Western markets. The indoor vertical farming industry is dead, billions of dollars gone. The bull case for US and European farm equipment manufacturers is also gone—farmers in BRICS countries aren’t buying our tractors and farm equipment, and never will again. Real incomes on American farms are falling, and even negative, instead of going up. And last year we urged viewers to strongly consider selling farmland, because the case for higher farmland prices goes away when the profits do, and today we’re seeing prices softening, quickly, across most of the US farm sector.
Nobody thinks things will get better soon. The good news, such as it is, is that the bad news is less bad. 2025 losses on American farms will be knee-deep instead of waist-deep, hopefully the losses not as extreme as in 2023 and 2024. But margins for corn and beans, for example, are at 4-year lows. Corn farmers in the United States lose 63 per acre, up from minus 164 dollars in 2024. This is on highly productive farms in central Illinois, so best case scenario for the very best farmers—they will lose 63 dollars an acre. Soybeans are getting worse—soybean farmers will lose 54 dollars an acre this year, worse than the minus 46 dollars an acre last year.
Main reason cited here is low crop prices. Remember—not supposed to happen—everyone thought crop prices would be going up along with the human population growth and growth of cities. Breakeven prices on corn and soybeans are far below operating costs, and the USDA is revising down their forecasts for pricing this year. These are big downward revisions, by the way. Last year the USDA estimated corn prices would be $4.55 a bushel in 2025, new estimate is $4.10, 10% lower. Soybean price forecasts were also revised lower. The current slump is the worst in recent history.
The only good news, is that’s the word, is that US farmers were eligible for huge subsidies and grants because of disaster aid. Forecasts are for $180 billion in 2025, a 30% increase from last year. This aid is related to natural disasters over the past two years, which will help farmers who increased their bank borrowing to cover their costs.
But that aid is just temporary. Policymakers are racing to fund new appropriations for US farmers. Their reasons are here—chronic losses, per acre, for the biggest crops. They demand higher reference prices—which is minimum prices. Problems getting loans because interest rates are going up and incomes going down, and all this is leading to fiscal impacts in farming communities and rural governments. They mention rice farmers, who lose $345 per acre.
In this proposal, lawmakers are pushing for a big increase in reference prices and new government-guaranteed loans.
Some farmers are trying to get by in creative ways, renting out their farms and ranches on Airbnb, or building corn mazes to generate foot traffic and other income. Other farmers are quitting altogether—insiders say that farms that own all their land free and clear, they might make it. But anyone with mortgages or working as tenant farmers need to have record crop productivity in order to make money.
These are the realities, and these trends are not new—these losses here are years in the running. So we’re seeing across markets now the realization that US farmland should be selling off. In Iowa, farm prices have seen a notable shift, and now reporting price drops, with more forecast for 2025. High interest rates is a big problem now, along with high operating costs. Same story in Illinois, where the rise in interest rates is a unique challenge---higher interest rates make other investments more attractive, compared to farmland.
The Federal Reserve of Kansas City has a huge district across 7 states, and credit conditions deteriorating for the past 9 months. Asset liquidation has become more common—that means foreclosures and repossessions.
This is not a blip, but a long-term trend. We will unlikely to see, ever again, the prices we’re seeing now, even as they’re selling off. Here are other states. Indiana, Ohio, Michigan, Kentucky, smaller price reductions for high quality farms, significant reductions for other farms. Iowa and Southern Minnesota, prices dropping 5 to 10 percent. Further west, values down because of the lack of water, plus everything else. In the Dakotas and Western Minnesota district, the market is in chaos, and agents there think prices are down 10 to 15 percent.
Big parts of the California market are off a cliff, basically, and for farmers who don’t have water rights the losses are total. Orchards reliant on groundwater are down 30-40% in 2024.
Local real estate agents are finding local reasons to explain the softness in each of these markets. But the problems for our farmers, and for investors in this thesis, are global problems. Global markets are well supplied with food, global farms are well supplied with equipment, and global populations are being fed. Rising interest rates mean that investors can find better risk-free returns in lots of other places, so there is no new investment capital coming in to these markets. The buyers are gone, and here comes the selling.
Resources and links:
Farm Futures: Is the worst behind us?
https://www.farmprogress.com/marketing/is-the-worst-behind-us-
Farm Income to Increase in 2025 Thanks to Federal Aid
https://farmpolicynews.illinois.edu/2025/02/farm-income-to-increase-in-2025-thanks-to-federal-aid/
USDA: Farm Incomes Up in 2025
Urgent: U.S. Farmers Face Financial Crisis as 2025 Farm Bill Looms – Farmonaut Analyzes Impact on Crop Insurance and Safety Nets
Net farm income projections skewed by pending disaster, economic relief payments
US farmers turn to Airbnb, corn mazes to outlast agricultural downturn
Outlook for Agricultural Land Values in 2025: A Delicate Balance
What’s Happening In The Land Market? Your Regional Breakdown
https://www.agweb.com/news/business/farmland/whats-happening-land-market-your-regional-breakdown
Iowa farmland values fall, breaking 5-year trend
https://themarcusnews.com/2025/01/23/iowa-farmland-values-fall-breaking-five-year-trend/
China's Belt and Road Investment Map
https://www.statista.com/chart/16075/the-share-of-bri-investment-destinations/
California farms fail as land values plunge amid groundwater crisis
https://www.siliconvalley.com/2025/01/28/california-groundwater-crisis-farms-fail/
Farmland Market Softens Heading Into 2025
https://www.hertz.ag/blog/detail/farmland-market-softens-heading-into-2025
Can American Agriculture Save The World?
https://www.growingproduce.com/vegetables/can-american-agriculture-save-the-world/
John Deere price quote, monthly 2013 - present
https://finviz.com/quote.ashx?t=DE&p=m
Indoor Vertical Farming Investments Have Now Crossed USD 2.4Bn in 2022
https://www.indoorverticalfarm.com/p/indoor-vertical-farming-investments
Private Financial Sector Investment in Farmland and Agricultural Infrastructure
Agricultural Productivity in Africa
https://marginalrevolution.com/marginalrevolution/2024/07/agricultural-productivity-in-africa.html
Nikkei Asia, China drops $11bn anchors to expand Maritime Silk Road
BRICS Expands Footprint in the Global South
https://www.statista.com/chart/30672/brics-expansion-map/
https://finviz.com/futures_charts.ashx?t=ZC&p=w&r=range_01-01-2022x
https://finviz.com/futures_charts.ashx?t=ZO&p=w&r=range_01-01-2022x
https://finviz.com/futures_charts.ashx?t=ZW&p=w&r=range_01-01-2022x
https://finviz.com/futures_charts.ashx?t=ZS&p=w&r=range_01-01-2022x
China’s 2024 total grain output raises to record 706 million tons
https://www.hellenicshippingnews.com/chinas-2024-total-grain-output-rises-to-record-706-mln-tons/
Reuters, Russia eyes its second-largest grain harvest of 140 mln T in 2023
https://www.reuters.com/article/markets/commodities/russia-eyes-its-second-largest-grain-harvest-of-140-mln-t-in-2023-tass-idUSL8N3BU4HG/
The Rio Times, Brazil Projects Record Grain Harvest of 325.7 Million Tons for 2024/25 Season
The vertical farming bubble is finally popping
https://www.fastcompany.com/90824702/vertical-farming-failing-profitable-appharvest-aerofarms-bowery
Farm equipment and the right to repair. The high prices have been engineered to extract additional revenues to goose the "shareholder" value of companies like John Deere. Now that's a big problem right to repair activists have been fighting for years.
china commie shill