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Back to "Normal," But Then What?

This episode is also available on Spotify and Apple Podcasts.

“I described it as agriculture returning back to normal,” said Dr. Chad Hart, Iowa State University Professor and Extension Economist. “Thinking back a couple of years…back to 2021,2022…what we were seeing -- especially on the crop side of agriculture -- was really strong prices, which led to some record farm incomes across the country.”

Hart continued, “So, farmers were enjoying a really strong, firmer economy. 2023 was sort of the year of transition where we saw those prices and incomes fall a bit. But we’re still around breakeven. You think of the prices around what it costs to produce the crops that we grow. And that’s where we seem to be settling out. We look forward to 2024…it’s not terrible. But it’s also not great as we look at the farm economy.”

Hart grew up on a small cattle farm in southwest Missouri and has spent the past 33 years at Iowa State University in a variety of roles committed to agricultural and rural development, crop insurance, and biofuel policy.

He has followed numerous ups and downs in agriculture but doesn’t see the coming year as one where land values will substantially fall with a “market correction.” Hart cited Iowa land trends as an example.

2021 saw 29% growth in land values in the state, followed by 17% appreciation in 2022, and almost 4% percent last year. “What we’re seeing now is… I’ll call the stabilization of that value. Incomes have come back but we’re not necessarily seeing those farmland values fall because the potential forward income looking into the future is still a good outlook.”

RELATED: The Iowa State University Land Value Survey found an increase of 3.7% per acre in Iowa for 2023. See the full survey here. 

“The old joke in real estate is…let’s face it, they’re not making any more,” Hart laughed.

The Federal Reserve Board may drop interest rates a few times in the coming year, Hart expects, although probably not substantially. Hart thinks that could increase the chances some farmland changes hands due to less expensive borrowing costs for buyers. “You’re making it a little easier to get the loan to purchase that piece of ground. You’re making that interest on the operating note for that farmer a little less expensive, so that they have more free cash to maybe explore looking at the next buy.” 

As part of his role at Iowa State University, Hart spends the winter months traveling the area and talking with farmers. “I would say they are cautiously optimistic as they’re looking forward,” Hart said. They have watched their prices and income shrink over the past few years. But they’re still producing at a very good clip despite some of the weather problems.”

Here is what Hart is watching right now:

·        Futures market

·        Projected commodity crops

·        Producers’ ability to overcome drought challenges.

“A lot of looking at how our future prices are setting up…how farmers will be utilizing their land this coming spring. So, a lot of this time between January and March is sort of trying to guess how many acres of corn we’re going to plant,” Hart said as he sits in his office in Ames, which is part of the broader regional heart of prime corn and soybeans potential. “Soybeans…what sort of changes are we going to see across not only the Iowa landscape? But more importantly, I especially look at the entire Corn Belt.”

Much of the region has dealt with almost four years of drought. Despite that, the country produced a record corn harvest. “It’s been an amazing run of productivity,” Hart said, “It’s hard to see the drought impact in our production.”

Iowa recently had an unusual occurrence of two snowfalls in one week that dumped nearly two feet of snow in some places. That eventual melt could bring some needed moisture to the ground.

RELATED: Dr. Chad Hart explains what he considers to be “silver linings” in the 2024 agricultural


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