There are several considerations farmers need to take into account when they are looking to expand their land assets. Matt Gunderson is Senior Vice President of Strategic Relations at Farmers National Company.
“There are some instances where, hey, it’s right next door. It makes sense. It’s a once in a generation. I’ve driven past it for years. Those types of situations with that. How do I do that? How do I have a next generation come back? How do I spread that across more acres to be able to grow? And so it’s really sitting down and looking at those business decisions, of where things are sitting at with it, that, you know, we start seeing that’s where that localized demand comes in, and we start seeing some of that competitiveness that are holding those market rates up, because there’s just a lot of areas that it doesn’t come up that often.”
Land values remain steady now in spite of lower grain prices. Gunderson says many observers are watching for a new land value plateau.
“So if you look back at the last two to three run ups in grains that have come back down, it used to be, let’s say, 25, 30 years ago, I call it a one to one ratio, in terms of the percentage grains went up way indoor down, right. The land market kind of followed it. Two to three run ups ago, it started creating new plateaus in agriculture. So grains would drop, say, 30% land only drops 20, maybe 25, and creates a new plateau. Grain markets take off. Guess what happened? Land market follows. It creates the headlines with the new highs. And so I think what we’re going to find, and as I survey folks in a variety of demographics, farmers included, and I just raise the hand, survey type thing in a crowd with talking, everybody thinks this one’s going to create new plateau as well. Right, they’re not making anymore, land, it’s a good long-term asset, especially near your culture and it’s what we know. So, we’re comfortable with is what we’re familiar with and so we’re anticipating, it’s going to create another new plateau the question just is, where does that plateau land and start after.”