In its 2022 report, the USDA said the average per acre valuation in the Corn Belt states of Illinois, Indiana, Iowa, Missouri and Ohio was reported at $7,930 an acre in 2022, up 15.3% over 2021.
Ty Higgins of the Ohio Farm Bureau said that in 2022 Ohio cropland values averaged $7,550 per acre which was 11% up over the average of $6,800 per acre in 2021.
“Farm real estate has become one of the best investments in America and the competition for cropland has never been what it is today,” Higgins said. “For farmers, that means that growing an operation is extremely challenging and farmers that are well leveraged have the best opportunities to expand.”
Greg McGlinch, a Darke County farmer and educator, said the cost of farmland will affect the next generation of farmers.
“The costs associated with land and the buy-in for equipment,” he said. “It takes a lot to get into the industry and it’s getting harder and harder to purchase land.”
A fifth-generation farmer, McGlinch’s family has been farming for more than 100 years. They farm corn, soybeans, wheat, cereal rye, oats, clover, and raise pasture chickens. He said they have been diversifying the farm.
“Like any business, you have to make sure you’re progressing forward,” McGlinch said. “You’re always competing against development, which creates challenges for farmers. … A lot of farms are family owned and they want to preserve the land for future generations.”
State incentives
The Ohio Department of Agriculture this year launched a new Beginning Farmer Tax Credit to assist farmers entering the field with tax breaks as they launch a career in agriculture. The program also gives tax incentives to people or businesses that sell or rent farmland, livestock, buildings or equipment to beginning farmers, according to ODA. The program is the result of legislation signed last year by Ohio Gov. Mike DeWine.
Higgins said this initiative is needed because the higher prices for cropland make it enticing for families who don’t want to continue the farm to sell to developers or industry. If farmers choose to sell to a farmer looking to continue the farm’s legacy, that will help preserve Ohio farmland for years to come.
“Even more important is the work Ohio Farm Bureau has done for Current Agricultural Use Values (CAUV) to help keep the tax bill of cropland manageable for the family farm so they can continue to remain sustainable for the next generation,” he said.
Higgins said consumers are more affected by the price of commodities, fuel and labor on the back end of the supply chain than by cropland prices.
“Farmers are price takers, not price makers,” Higgins said. “Regardless of what they pay for cropland, they will only make the income that the markets will give them for the crops they produce. They are unable to pass higher costs of land on to the consumer.”
Harder to invest
A sixth-generation farmer in Greene County, Craig Corry has been farming corn, wheat and soybeans for the past 40 years. Most farms in the Miami Valley are family farms and are multi-generational. “You either marry in or inherit a farm,” he said.
“I thought land values had leveled off a year or two ago,” Corry said. “Farmers spend all they make replacing equipment, purchasing nutrients and fertilizer. There’s always a demand for my money. If land comes open, there will be plenty of farmers wanting to buy.”
“If you own land, it goes up in value and it increases a farmer’s borrowing power to leverage additional purchases (of land), something farmers calculate to determine if they can pay debt,” he said.
Corry said farmers look at location and proximity to the home operation when purchasing land. He said the rising prices for farmland won’t impact him as he’s not looking to buy because farmland near him isn’t available.
He said the last 10-15 years there have been low interest rates and farmers have been able to be competitive. But a 1%-2% increase can be a problem for farmers to get operational loans to purchase equipment upgrades and other materials.
County auditors see spike
Miami County Auditor Matt Gearhardt said, “A lot of people see it (owning land) as a safe investment and it’s competitive as farmers try to expand cropland. Crop prices are high and the input costs are high for farmers which means the end processors pass on the costs to the consumer.”
Gearhardt said cropland prices have not dropped off but that prices will remain steady until they eventually flatten out.
“I know that number will be increasing this year for our revaluation, but cannot estimate what those numbers are at this point,” said Preble County Auditor Lavon Wright. “I believe that the prices are increasing because population is increasing, and land is becoming more and more sought after. I also believe that people are moving out of the city and buying farmland for privacy.”
Geoff Surber, Darke County deputy auditor, said, “Higher crop prices are encouraging people to expand their farms. The increasing concentration of farmland is decreasing the number of farmers.”
Warren County Auditor Matt Nolan said the price of farmland is increasing because it’s not developed.
‘Better than the stock market’
Gail Lierer grows corn and soybeans on her family farm in Butler County.
“(Farmland) is getting harder to buy and for small guys, it’s getting harder to make a living,” she said. “A lot of guys don’t have the capital to do it.”
“Ground is a valuable commodity for older farmers. People are out for ground because it’s a good investment — better than the stock market,” she said.
Lierer said they have no plans to purchase more land because there is no farmland coming around for sale. She said it costs about $335 to rent an acre of farmland.
Credit: Nick Graham
Credit: Nick Graham
Lierer’s parents moved to the Butler County property in 1945 and she and her husband took it over in 1983. Now her kids are running the farm.
“We purchased the land when we got married and added to it over the years,” she said. “It was a good investment at the time.”
A family business
Tim Hesselbrock, a retired Butler County farmer, said the cost of farmland is mostly driven by neighbors or outside influences. He said land costs also are driven by the quality of the soil. In addition, people are not buying whole farms but instead they are buying pieces of different sizes.
Hesselbrock said rental acres also are increasing and that it costs between $300 and $400 an acre to put a crop on it.
“Fertilizer costs have been increasing in the past five to six years,” he said. “We’ve seen improvements in the price of crops, but it’s not keeping up with expenses..”
“People are buying out farmland to develop and may not want to be in farming,” Hesselbrock said.
McGlinch, a professor who teaches agronomy and agribusiness at Wright State University’s Lake Campus, said he has a son and daughter who have an interest in farming. One of his sons is interested in the technical aspects of farming, while his daughter is interested in education. His other two younger sons like farming and still work on the family farm.
“All of them will have the opportunity if they choose, but I have encouraged them to look at all of their options,” McGlinch said.
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