According to the Land Values 2021 Summary Report released by the USDA’s National Agricultural Statistics Service, farmland values across the United States are increasing at a rate not seen in almost a decade.  The per-acre land value currently stands at $3,380, a 7% or $220 increase over 2020, a growth rate not witnessed since 2012.

The Midwest farmland market, home to large volumes of high-value crops, has contributed the most to this price rise. Take, for instance, Wisconsin, which has witnessed an annual increase of 9% in its cropland value in the last 12 months. Similar is the case with Nebraska, which posted a double-digit rise in farmland prices over last year.

Various factors are driving the farmland market across the United States in general and in the Midwest in particular. The one that is the most highlighted is the assistance the government has provided to farmers in the face of the COVID-19 pandemic.

Other factors driving farmland prices higher include stronger commodity prices, record low interest rates, and limited farmland for sale. Rising investor interest is also putting an upward pressure on farmland prices, with reports claiming that both foreign and local investors are now looking at the Midwest farmland market as a safe, long-term investment.

Perhaps the most important factor is low interest rates, which are currently at historical lows. The average interest rates for farm real-estate loans, which stood at 6.5% in 2018, have presently fallen to 4.24%. This fall in interest rate means that sellers could buy the same farm at an increased price in 2021 than they’d have in 2020 and still have the same monthly payment.