A panel of Purdue University agricultural economists say steadily rising farmland prices reflect market fundamentals - primarily higher crop returns - and do not indicate a "bubble" that could burst, sending farmland values plummeting. The economists also caution the farmland market is thinly traded, noting that recent, sharply higher prices may be unrepresentative outliers.
According to the Purdue economists, in order to support increasing farmland values, investors must believe in strong future earnings, growth rates, or continuing low interest rates. Chris Hurt said the current situation is that higher farm income, lower interest rates and the expectation of continued growth, are all working in favor of higher farmland values and farmland prices are responding dramatically.
Craig Dobbins says investor groups that own farmland based on current income expectations aren't like "buy-and-hold" farmers.