Kent Smith: Tariffs, Weather, and Bumps in the Road for Farmland Values

Tariff news changes week to week and even day to day, leaving a lot of people in agriculture feeling uncertain about the future. But Kent Smith -- president of Stalcup Ag Service in Storm Lake, Iowa -- has seen a lot in his 40-plus years working in agriculture. He told American Farmland Owner that he sees positive news on the horizon.

Kent Smith bio:

• Raised on grain and livestock farm in south Central Nebraska

• Accredited farm manager since 1988

• Iowa Chapter of the American Society of Farm Managers and Rural Appraisers – former president

• Joined Stalcup Ag Service -- 1988

  
  

AFO: “As you look ahead, any thoughts on what will happen in the next year with land values?” 

Smith said there is a lot of uncertainty from day to day about what will happen with tariffs, but he is hopeful. “Overall, what is going on with tariffs will be positive for agriculture,” he said. “We can have some bumps in the road, but long term, I see it as positive.”

Smith has more concerns about the weather. “If we don’t have a weather concern that comes in to trim back the crops that are growing, grain prices will be lower at the end of the year than today. And that correlates to less support for land values to be steady,” he said.  

AFO: “How low will they (farmland values) go?

“They will probably trend a little lower,” Smith said, “That’s my expectation.”

“Once things turn around, going into 2026, they could level off. I don’t expect any major reductions in land values. They might drop another five percent, but I don’t see them dropping another 10 to 15 percent.”  

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AFO: “What are the farmland sales trends you see from your work with Stalcup, serving northwest Iowa?”

“The trend seems to be not as many sales right now, mostly because of concerns over the tariffs and everything else.”

Smith cited fluctuations over the past few years.

“If you look at land value trends, we hit our high in the second quarter of 2022. Then we started trending down a bit. But the last six months have been pretty steady with land values.”

Smith has seen investors pull back recently.

“In 2022 outside investors were looking to buy as a hedge against inflation. Those investors have mostly backed away as investors.” 

He said that neighboring farmers are still the bread and butter of land sales in northwest Iowa. Smith estimated they account for 85-90% of the land transactions with the remaining 10-15% being investor landowners.  

“The people buying are in good financial condition. They have a lot of equity in their land, and they are just adding to that. So, the farmer is going to aggressively go after the land,” Smith said.

AFO: “Do interest rates matter?”

The short answer, according to Smith, is that interest rates do not matter. Most of his business comes from selling estates and land that has been passed down to family members. 

“They don’t really have an effect from the seller's standpoint,” he said. “We didn’t see a lot of fall off from buyers because of interest rates because land values are at near all-time highs.”

AFO: “The ISU Cash Rental Rate Survey came out recently. What does it tell you about farmland values?”

Smith said Stalcup participates in the survey by providing information about rental rates. But he feels like his company often has more county and district-level data from farms they manage, compared to what Iowa State provides in the survey.

“We look at it as a general guideline. Generally, the rent we are negotiating is somewhat higher than what average is for Iowa,” Smith said.

Rental rates went down, he noticed, same as the Iowa State survey.

“Most of our leases got adjusted give or take five percent. Might have adjusted rental rates a little more if there was, for example flooding or a farm that had lower production,” said Smith.

Smith said cash rent is the trend for a lot of farms. But he also manages other arrangements, like custom share plans that require landowners to have some skin in the game and potentially bring greater returns than cash rent.

“About 40 percent of farms we manage are on a custom farming basis, either cash, custom, or what we call a ‘custom share,’ which is like an 80-20 share. The owner gets 80 percent of the crop. The operator gets 20 percent of the crop for his labor and equipment,” he said.

He continued, “Cash rent is a steady kind of return. Are cash rents keeping up with land values? No. So, your return on farmland is going down over time. But your appreciation of land continues to be pretty positive over time.”

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