A recent report from Farmers National Company confirms what Berry Ward, Ohio State University agricultural economist, foretold last November. Farmland values in Ohio have moved just slightly lower.

FNC puts a positive spin on the news, "Positive income results for farms, combined with a tight land supply, have buffered economists' previously projected downturn of farmland values," the company says in a news release issued last month.  

The company claims to have booked "strong real estate sales for the first half of 2014 -- down somewhat from record sales experienced in 2013."Aggressive marketing by Farmers National agents and good demand for land have propelled this year's sales," the company says.

"The big story is that the land market is stable, despite projections that farm income and land values would drop," according to Randy Dickhut, vice president of real estate operations of Farmers National Company. "The anticipated large drop in farmland values hasn't happened, as farm incomes were stronger than expected going into 2014. Original income projections of 20% below last year were not realized."

During ag economic outlook meetings with Ohio farmers last November, Ward, production business management leader for OSU Extension, cited statistics from the Ohio Field Office of the National Agricultural Statistics Service, to back his expectations for Ohio land prices trend to remain flat or even reverse in the coming year. The key factors, he noted were crop profitability and interest rates. Both expected to move in directions that would be unfriendly to farmland sellers.

Ohio cropland value rose 12% last year, with bare cropland averaging $5,600 an acre, said Barry Ward. Farmers National, says their sales figures show prime Ohio farmland slipping from an average of $8,200 a year ago to $8,000 for the first six months of 2014.

Dickhut says economic trends and key market factors shifted in a way that paints a more positive picture for this year. While experts predicted a softening in land values as grain prices started to decline, in fact , commodity price drops boosted worldwide demand for U.S. exports, resulting in higher grain prices than initially thought. Higher grain prices and better farm incomes actually stabilized land prices going into 2014.

Quality farmland in the east central region, including Illinois, Indiana, Ohio, Southern Michigan, Eastern Kentucky and Eastern Missouri, continues to bring strong prices in most territories, supplies are limited- with demand steady, according to Roger Hayworth, area sales manager for Farmers National Company, Lafayette, Ind. While quality land still leads demand, regionally there have been signs/indicators of a slight market correction as values have dropped on some property types two to four percent in general. "This region had good sales activity into early March with quite a few land auctions and good numbers," says Hayworth.

"However, sales volume has flattened in the last month reducing the number of transactions. Buyers overall are taking a conservative approach in the marketplace. Levels are down from 2013, with interest rates beginning to rise and commodity prices dropping, but nothing substantial." Buyers will continue to watch the economic environment and its impact on values when deciding if and when to purchase land, according to Hayworth. Additionally, potential sellers may put land on the market if they feel values are starting to peak. "Rising interest rates could be a concern to the overall market values, as with crop production volumes later in the year" Hayworth said.

"If the rise is gradual the ag market will adapt, but a sharp jump could have a deeper effect." Top prices in the region can be seen in Illinois at $12,500 per acre on average for high quality land. These levels are followed by Indiana showing values up to $10,000 per acre, and Ohio, which is at $8,000 per acre.

Sources: FNCl, OSU Extension