Farmland prices and rents stabilized during 2017, and many farmers and landowners are facing the new crop year with a brighter outlook. That was one of the key messages delivered at Schrader Real Estate and Auction Company’s annual State of the Farmer’s Economy Update meetings recently in Florida and Indianapolis.
“After several years of lackluster profits, farmers ended the year with yields that exceeded many projections, and we even saw some firming of commodity prices that further helped boost farm income. It was still a challenging year for many, and we saw some increase in debt. But the climate appears to be more positive than many expected,” said R.D. Schrader, president of the company.
Farmland prices and rents held relatively steady, despite some headwinds such as rising interest rates and an uptick in farm debt, he noted. “The recent tax cuts have encouraged many, and for the first time in many years, the inheritance tax has been removed as a concern for the overwhelming majority of farmers and landowners,” said Schrader.
Schrader noted a narrowing of the gap between higher-quality farmland and less productive land. “In many cases, farms with more woodland and water benefited from an improvement in demand for recreational land,” said Schrader.
Steve Slonaker, a farm manager and appraiser for Schrader, advised landowners to give careful attention to succession planning and farm management.
“It’s very easy to put off succession planning, but the results can be tragic if heirs are not on the same page. The good news is that we have a very healthy number of young farmers who are well educated, hard-working, and more committed than ever to the challenge of growing our foods. That provides a solid foundation for planning that will preserve and grow farm estates,” said Slonaker.
Still, with the improved optimism the uncertainty about the future of NAFTA is still a concern, according to the Purdue/CME Group Ag Economy Barometer. Read the full report here.
The February Purdue/CME Group Ag Economy Barometer showed an increase in agricultural producer sentiment for the second-straight month. The barometer has jumped 14 points since December 2017. (Purdue/CME Group Ag Economy Barometer/David Widmar)