The initial estimate for the Q1 FPI showed farmland prices declining modestly in Q1. The moderate pullback comes amid a slowdown in farmland values in several key agricultural states. Still, strong overall farm incomes continue to provide support for farmland values nationally, with many regions continuing to see rising prices.
Transaction data for Q1 2025 showed the FPI dropping to $8,164 per acre, 3% lower than $8,298 per acre in Q1 2024. At the same time, revisions were made to previous FPI values, including lifting the Q4 2024 average to $8,404 per acre based on updates to the previous quarter’s data.
The plateauing in farmland values mirrors trends in other regional indices. This includes the Federal Reserve Bank of Kansas City, which reported non-irrigated farmland values were largely flat in the Tenth District heading into this year. The Federal Reserve Bank of Chicago reported a decline in average farm real estate values to end 2024, the first such decline in five years.
Farmland values continue to be pulled in different directions nationally. Across many Western and Southwest states, increased water regulation and tighter profitability for numerous permanent crops over the last several years have reduced buyer enthusiasm for farmland. At the same time, robust farm incomes over the past several years, which received a boost from government payments this spring, are helping lift farmland values in other regions.
Uncertainty surrounding trade is likely to influence FPI for the remainder of 2025. Potential new trade deals could provide a significant boost to U.S. agricultural commodity prices this year, which would likely have a spillover impact on farmland values. Conversely, if U.S. commodities face restricted access to global markets due to tariffs or restrictions, farmland value growth could continue to plateau this year.