Recent signs of a cooling farmland market are not viewed as alarming by agricultural economists, who distinguish current conditions from the severe crisis of the 1980s. Megan Hughes, an expert in agricultural economics at Kansas State University, notes key differences in today’s financial landscape, including more stable interest rates and improved lending standards. While borrowing costs have risen compared to recent years—contributing to reduced land values—these shifts are considered part of a normal adjustment cycle rather than a systemic threat. The earlier period of low interest rates had fueled increased land purchases, and the current uptick in financing expenses naturally leads to softer demand. However, modern lending practices have become more cautious, with financial institutions adopting stricter evaluation criteria that help prevent widespread defaults. As a result, experts see the present market correction as a manageable phase, unlikely to disrupt long-term agricultural productivity or rural economic health.
— news from Brownfield Ag News
— News Original —
Farmland market softening not concerning for long
News n nFarmland market softening not concerning for long-term economic outlook n nAn ag economics professor at Kansas State University says the concerns of today’s ag economy are different than the 1980s farm crisis. n nMegan Hughes says there have been a few changes. “We were seeing historically high interest rates and we’re not there. The other thing is there have been lots of changes in lending practices and lending regulations.” n nShe tells Brownfield the farmland market can be a good long-term indicator. “Softening right now isn’t terribly concerning.” n nHughes tells Brownfield borrowing costs have been the largest expense. “We’ve seen low interest rates for a couple of years and that drove an increase in land markets. Those interest rates have gone up and that will drive some softening in the land market.” n nShe says loan officers have become more conservative with their lending decisions, which have helped reduce defaults.