Economist predicts that interest rates may not impact demand for land in early ’23

An ag economist says high interest rates may not have a major impact on the demand for farmland heading into 2023.

Nathan Kauffman is with the Kanas City Federal Reserve Bank. “Normally, what we would expect when we see high interest rates is that it could push back on the sentiment on farmland, but there have been lots of other aspects for related to uncertainty that, I think, makes farmland an attractive investment for some.”

Kauffman says the war in Ukraine and strong farm income are influencing demand.

He tells Brownfield some of the land is being purchased by investors. “That said, higher interest rates may change some of their calculus about where they think of investing or what returns might look like.  Farmers are relatively active. It’s been a strong year for farm income.  Many farmers are still in a pretty strong financial position to consider additional purchases.”

He says that could change if commodity prices drop and expenses remain high.

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