Sterling Liddell, vice president, food and agribusiness research, Rabo AgriFinance, talks about what's driving land values. There are four important factors: commodity prices, input costs, margins and interest rates.
"In ag, we will produce, until we overproduce the market, then prices will come down. That's one of the main factors behind determining land value; that gross revenue that can be generated by the land," he says. "We needed about a 10% decrease in land values over the long term to be sustainable at these rates.
"We don't expect to see a big drop in land values, but more of a settling," says Liddell, who maintains that over the long term, the biggest threat to land values remains interest rates.