Economist urges caution when buying farmland

An ag economist is cautioning farmers from overspending on farmland in 2022.

The University of Missouri’s Ray Massey tells Brownfield he’s bullish on farmland values in the near-term.

“Given the money that’s available out there in farmer’s hand’s and investor’s hand’s, current interest rates still being quite low there’s quite a bit of indication that land prices may rise,” Massey said.

And he said high grain prices could push some to overcommit on land purchases.

“Our high corn prices, our high soybean prices are causing people to be optimistic,” he said.

But Massey said the long-term outlook for ag inputs and crop prices could be unstable and cautions farmers from taking more debt than they can handle.

“But then, three or four years from now when commodity prices have come back down, that strain of land prices – you’re still paying the same amount for it,” he said.

He said land prices are often ‘sticky’ and don’t come down when commodities do. Massey said farmers looking to buy land need to have a 10-year cash flow plan in case grain markets lose value.

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