GREAT BEND, Kan. (KSNW) – American farmland values could be heading to its first significant drop since the mid-1980’s. Kansas has seen the sharpest decline.
This year’s record harvest brought commodity prices down, and farmers’ and ranchers’ incomes fell with it.
“Since we’ve seen that income drop precipitously, or at least in the last year and a half to two years, we’ve really seen a reduction in these farmland values,” said KSN Ag expert, John Jenkinson.
A government report shows the value of land and buildings on Kansas farms fell around 7% since last year. The feds point to a drop in commodity prices for the falling land values.
KSN asked Jenkinson what this means for farmers, specifically those who used land as collateral or borrowed money to purchase land.
“The value of that land has decreased, while the amount that they paid for it or the amount that they borrowed against it has not decreased as fast as the farmland has decreased,” he said. “So it’s going to put a financial hardship on some of these folks.”
Local farmers are experiencing hardships in other ways as well.
“It’s tightened everything up,” said local farmer, Richard Rugan. “Instead of buying equipment, everybody’s not going to buy equipment. You’re going to spend less money there and make your other payments.”
While most consumers won’t notice a change in prices at the store, behind the scenes, the local economy will take a hit.
“We’re also going to a see a hardship put on many, many bankers, who are going to have to make some tough decisions, as well as the real estate folks, who sell this farmland because of the reduced values,” said Jenkinson.
He added that economists don’t see land values getting better anytime soon — saying it might be another year of reduced land values.