Apr 10 | Closing Market Report Special Edition

The Value of Farmland
Bruce Sherrick, Director
TIAA Center for Farmland Research
University of Illinois

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Todd E. Gleason🎙🇺🇸

University of Illinois

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The Closing Market Report airs weekdays at 2:06pm central on WILL AM580, Urbana. University of Illinois Extension Farm Broadcaster Todd Gleason hosts the program. Each day he asks commodity analysts about the trade in Chicago, delves deep into the global growing regions weather, and talks with ag economists, entomologists, agronomists, and others involved in agriculture at the farm and industry level.

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Todd Gleason: From the Land Grant university in Urbana Champaign, Illinois, this is the Closing Market Report for the tenth day of April 2026. I'm Illinois Extension's Todd Gleason, out of the office for the day. So, no update of the commodity markets, however, we will reflect on the value of farmland. Not farmland values, but the value of farmland. What you'll hear today is a presentation made at the All Day Ag Outlook on the third day of March at the beef house in Covington, Indiana, with Bruce Sherrick, agricultural economist at the University of Illinois. I think you will find it very interesting as he puts the value of farmland in the world market, in terms of inflation, as well as farm policy. Now here's the director of the TIAA Center for Farmland Research on the Urbana Champaign campus of the University of Illinois and agricultural economist, Bruce Sherrick, from the All Day Ag Outlook at the beef house in Covington, Indiana in early March.

Bruce Sherrick: I think it's a really good time to step back and say, can we talk about this from a world perspective, not just an Illinois and an Indiana perspective, not just a Midwest perspective, not even just a US perspective. But I think this is actually pretty critical and there's some insights to be gained from it. On the front page, on the top right corner, there's something that says agriculturist footprint. This top picture though is a flat picture of the earth, and the places that are not gray or white are places that you can grow things capturing sunlight. And these are not moving around by the way. The places on the planet where you can grow things are fairly fixed. That's actually true. There's not a whole lot of chance to move where they are. Where people live is also fairly fixed, but we're piling people up a little deeper in certain parts, and that western part of Africa, kind of the thing that's hanging out like the chicken wing or armpit, that part is growing really rapidly. And from green to purple describes the intensity with which we use that agricultural production for food.

After we go from food, we go to feed. After we go from feed, we go to fuel. So the more intensely purple it is, the more we've already converted to alternative uses by taking those things we capture from the sunlight and distilling them or putting them otherwise into things that we use to power other things. Alternatives to that that use farmland might include solar, might include wind, might include some other things where we might come up with ways of doing more conversion of the things we grow into fuel, but we've already kind of saturated the planet with that and the degree to which fuel is a residual demand after feed and food is pretty clear.

Now look around the globe again, the middle of the US where we're sitting is really, really fertile. We really have really tremendous production. But so do parts of Brazil, and they're not completely as developed, they're not quite as filled in as in that middle part of the US, right? So when you hear the quote "buy land, they aren't making any more of it," it's not quite true, we can actually still add quite a few acres in the Southern hemisphere.

But I want to ask you a couple of questions really quickly. And again, these are things that you should have like at the top of your mind necessarily, but they're important to put this all into context. That line that you see across that chart is actually the equator. Undergrads will routinely miss the question is more or less than half of Africa north of the equator? Way more. How much of South America is north of the equator? They'll say none. Well, no, actually... So give me a little bit of a, take a moment to think about what your answer would be, I won't make you say it out loud, but what fraction of the world's population lives north of the equator? It's almost 90%, between 87 and 89%. What fraction of the landmass is north of the equator? Only about 68, it turns out. What part of the production? 65. So there's a massive mismatch. And through time we have to move production to where people are, and we have to do that through trade.

We export a lot out of this country, but we don't depend on it quite as much as some other countries. I had the great experience this year of getting to travel to a lot of different places, spent some time on multiple continents, have been quite around the world actually, and Australia was one of the places that I had my eyes opened out quite a bit. Now it doesn't look like a lot of production there, right? But there's not that many people there either. So if you think about kind of in broad scale, think of the US which produces 17 to 20% of the world's coarse grain production depending on the year, it doesn't vary as much as you might think as a total fraction. Brazil is kind of like the US divided by two in terms of that share, but it's growing really, really quickly in terms of the world. Australia is kind of like divided by six, but what's different is Australia exports eighty-some percent of their agricultural output and has only a tiny fraction of the population. So one of the places you should expect to be celebrating the current trade war is the parts of Australia which are making eight and ten and twelve-year contracts with Eastern Asia to grow things like almonds and will replace Southern California. 25% of the almonds in Southern California won't be there after water gets a little bit more expensive.

So this rearrangement of world production is happening. For the large institutional investors, the strategy of going Northern hemisphere, Southern hemisphere for two growing seasons has been well understood for a long time. What's happened recently, and again I disagree with one of the comments earlier, a weak dollar helps you export things, but a weak dollar is not good for the economy. So if you're agricultural you want a weak dollar. If you're an economist who is thinking about the total surplus and rearranging that you may not. So figuring out why the world's production can still be absorbed at a different price than we currently have now is part of what I want to kind of weave through the conversation today.

That's a little bit different than who wants to buy land? We all do. Whose land is too expensive? It all is. Who wants to sell theirs? Nobody wants to. So we'll talk a little bit about what we have from current markets as well, but kind of keep trying to connect it back to these macro aggregates that we keep talking about.

So bottom left, and again some of these I'll just skip because they're in your handout, some of these I'll talk about without words that are on there, but clearly the things that influence land values are how much income it creates. You'll pay more for something that generates more income. What's unique about agricultural land is that part of the income comes in a deferred form we call appreciation and it's very tax efficient. More than half of the total return all the way since 1890, the first time we started tracking it, more than half has been from appreciation. But we also have this very high uncertainty about the sources of income and so we've taken ad hoc payments and made them the new standing programs. We just keep adding more ad hoc, adding more ad hoc, adding more ad hoc. And I fully agree with the comment earlier today, that's not healthy in the long run, but it does stem you over particular periods of time.

Also by region, livestock has done well for the last couple of years when commodity prices are low, because when commodity prices are low, feed costs are low. We also have a disruption in the travel of beef around the world, and so that's been very profitable, but that's not necessarily the long-term source of income.

Interest rates. Cost of capital is somewhat normalized at levels that we don't like, but they are closer to the long-term normal than we might want to admit after having lived through two periods post-housing crisis where rates were artificially low, and then after the COVID a monetary expansion when rates were also forced to be very, very low. We got very used to having very low cost of capital, right? And cheap money created a bunch of business models that just don't need to exist anymore. Reasonable cost of capital is something you should expect to allocate capital to the right sources through time, and I think we got, we all as a society got very addicted to OPM, other people's money. We got very addicted to cheap money and then when it went up it felt like it was a lot, like it was expensive, but it's not that expensive. What it is expensive is compared to the carrying cost for buying land. Four, five years ago, I would buy a farm and I would put as much debt on it as my cash rent would pay for with a little bit of a buffer. Can't really do that anymore.

But leverage in farmland is actually incredibly low. Bottom right of that same front page, farmland long-term leverage is only about 12.8%. If you take the total long-term debt against the total long-term land values, we're only at about 13%. That's insanely low. If you compare that to all the companies on the New York Stock Exchange compressed onto a single balance sheet, if you took all the companies traded, public companies, combine them all onto a single balance sheet, it's two-thirds debt, 67%. You look at agriculture, it's 13. Now debt is cheaper than equity, but farmers are willing to lend their equity through time to their own operation to capture all the other benefits including great tax efficiency.

Moving on, inflation. High historic correlation. That's true. There's a couple of charts in here that I think are just astounding. I've done nothing else in my career, the fact that I've studied inflation and farmland values for a long time has been pretty fascinating. They're very closely related and they should be. Farmland is not depreciable, and the definition of inflation is the change in the nominal value of widely consumed goods, services, and commodities. What produces goods, services, and commodities? Agriculture. So what we're going to have now in the next foreseeable future, frankly, is that around the world we're starting to run bigger deficits in general, not just in the US. And we're going to eventually have to monetize that, so inflation is not dead. Of the things I said, all of those were wrong, right? Including that Illinois beat Purdue, which those of you in Indiana think well that's wrong, that should never happen. So inflation is going to continue. It's going to become a feature, not a defect of the economy, and figuring out at what level to run it will be the main job of central banks. Watch the incoming Fed chair. Nobody knows yet what his view is going to be on this. Plus he doesn't get to make unilaterally all the decisions, so there is still a voting membership. Miron is also a problem on the Fed though for other reasons.

Decline of the dollar, again a very two-edged sword. So if you were to look at the US stock returns last year, about 25%, but if you put it on a dollar-adjusted basis for the world economy through time, about 11% of that was just paying for the decrease in the dollar. So it's really not as high as it seems.

Page two, number of farms. What's going on there? This number of farms chart is absolutely fascinating. 87% of the farms in the US only produce 16% of the output. 4.4% of the farms in the US produce 48%. That's highly concentrated, so the number of farms is kind of irrelevant except for political purposes. So if you look at this chart, we went from 4 million to 2 million, 1.87 million. Does that matter? I argue it doesn't. I kind of don't care anymore. I think of operators, farmers, and farmland owners as being two separate things that I want to think about. Now sometimes one person can be in both groups. Absolutely fine, I would like to be in both groups. I don't have time to be a farmer, but I think of the options to... I think of the economics of those two industries as being very different: the asset owner and the operator. I've said before, we don't really care, I have, I don't know what brand shoes on, pretend they're Nike. I don't really care if the people who built my shoes also own the shoe factory. Why do we care about the people who make farmland work be the owners of farmland? Well, there is something unique and different about that, so I'm not arguing we don't, I'm just saying I'm looking at the economics differently.

Now of this though, what's important is not just the fractions, only four or five percent, but about 15% really matter commercially. But those little blips you see are dates at which USDA decided they had to change the definition of a farm so we would have more farms. When you get less than a certain number it looks less politically viable, and I'll point out a couple of realities again. Amy Klobuchar has announced that she is going to run for governor of Minnesota. Amy is the ranking minority member on the Senate Ag. If we get to a point, which people expect at some point in time, to switch the ranking and leading membership of the Senate and House, she would be in line to take over for Boozman. Boozman is a very southern-facing chair of the Senate Ag Committee, and Senate matters much more than House. And if she wins or goes to Minnesota's governor's house, Cory Booker becomes the chair of Senate Ag.

I heard some people cheering in a very funny voice. Ah! So, what does that mean? Well, that means the coalition between SNAP and the House has to kind of protect population-based things, so food stamp and nutrition assistance, which is more than three-quarters of the farm bill now, no longer has to be quite as closely tied to the ag part of the farm bill. Now maybe that'll happen, maybe it won't, but I think it's a significant issue to contemplate when 100% of the farm income is matched with 100% equal size payments from the government. So again, how do you double a farmer's income? You buy him a second mailbox. But, bump, bump. So this money from the government issue is something that we are going to have to cope with at some point in time.

The next two slides, top right, cropland values, dollars per acre. If you think of those times about one and a half, those are about the values of farmland that you would consider cropland. So USDA farmland is everything, including all the little hobby farms, the little areas that aren't really farmed for profit, and commercial grade, and so quality is all the way down to things you wouldn't contemplate farming, but generally are tax-like farmland or woodlands. So times one and a half is a pretty good feature on that, but then bottom left, look at that number. So the performance of farmland as an investment has been astounding. So people say well I don't want to buy farmland because I can buy Nvidia. Well, if you know you can buy Nvidia in advance, good for you. But what happened today in the stock market? Farmland doesn't do that, right? Take a look at your 401k today if you don't know what I'm referring to and... well do that after we leave so you're not throwing tomatoes at me or something. But the average cropland return for farmland on any ten-year period since 1970 has beat the New York Stock Exchange. It's really quite astounding in that regard. A land value index, bottom right, just to show how it's gone. Farmland tends to go up and go up rapidly then kind of plateau, and then go up and go up rapidly and then plateau, and go up and go up rapidly and then plateau. But it doesn't have 50% retrenchments. Even if you go back to 1980, it only took a couple of years to get back out of 84 to 86. But it wasn't as dire as any of the major pullbacks even in my lifetime in the stock market. So Black Monday in the 80s, the dot com, housing crisis, COVID. Each of these dates where we could have individual stocks down 50% have happened several times. That doesn't happen in farmland.

Next page kind of looks like this. Has some stuff in the bottom right that are orange and blue, top left a bunch of squiggly lines. This says Illinois land value summary. This is not published yet, we do an annual survey all across the state of Illinois, we get about 1,200 sales returned to us by professionals in the field, annotated, curated, explained why they were good sales. And then we break them up by region and quality. We'll present the entire book later in the month... actually barely into April, in Bloomington. Please come if you're especially interested in farmland values, it's a great publication, about 100 pages, every sale in the state of Illinois, we get it all back later from the Department of Revenue for an odd reason we get all the sales back and we can track this very closely. What's happened, and I talked to a table over here earlier today, on the way up if my pinky is poor quality land but still farmland, and my index finger is Drummer Flanagan 140, highly productive stuff, on the way up prices tend to spread out. And on the way down they tend to collapse back together. Well what's happened here, and in particular in Iowa, even more than Indiana and Illinois, on the way up the top category really shot up because what happened was high prices bring other land to market, and they bring conflict land to market, and the land that sells is not sold randomly. It's not like we just scatter darts out of an airplane and the places they land are for sale. It's they get sold opportunistically when there's a good reason to sell, especially when land prices are high. So we had some $30,000 an acre sales. Well that's not the value of every other farm like that. So what you see in the transactional data is the land values go up and spread out, and then at the peak the top ones come down first. In Illinois, low quality farmland is still actually increasing in value if you're real about it, if you're honest about it. Indiana has been a little bit more stable, Iowa has been a little more of this. And so across the region, and I write a little book every year called National Land Values Report, publish it in January or so, and we do all 10 regions of the US. So I have to go figure out how to explain California, and the answer is just nuts. And Northwest, and Pacific Northwest, and the Delta, and the Southeast, and the Lake States, and the middle of the country, and the plains, and the corn belt. And the corn belt's the easiest one to understand. It comes closest to following what you think of as normal economics.

Top right, relative performance through time. The US Ag 32 States is an index, the 32 states is an index we've published for about 25 years now, and that's if you put all 32 of the top agricultural producing states onto a single index. Put them all together and said I bought one farm in each of those states, what would happen? It proxies pretty well for NCREIF, National Council of Real Estate Investment Fiduciaries, the other index we've helped maintain that's grown to about 20 billion in farms that we can track. It's really good. And average annual return from that entire period 1991 to 2025, just under 9%. If you go down to NASDAQ and Wilshire 5000 which are a little bit heavier in terms of tech and small, and if you go way down to Illinois, Indiana, and Iowa, you see that Illinois, Indiana, and Iowa beat the national average a bit. We're just more intensely commercial. And then the standard deviation, the amount they can change year to year is the second column. Jump over to the minimum and maximum. The minimum return is the biggest drawdown. So in farmland maybe you'll lose a percent, maybe you won't, but in farmland you're not going to lose 48, 50, or 60% in a year. So it's very desirable in terms of stability as well. And then the maximum returns you're also not going to get Nvidia kinds of returns. The bottom of the US Ag 32 state correlation, the CPI correlation of being 25%. Institutional investors, pension funds, and folks like the three major pension funds in Canada, the five major pension funds in Western Europe, high net worth individuals, folks who have a long duration, long period of holding, they like farmland because of the inflation protection.

Bottom left, slide 11, if nothing else terrifies you today, this one should. This is just inexplicable. If you look at the history of monetary aggregates... just as an inside joke by the way, whenever I do these I always start the chart on the left on my birthday, literally the day I was born, when I entered this planet because that's the part of history I think I'm entitled to say is important. So that goes from the day I was born until now, and we of course printed a little bit of money after the housing crisis, and most people think that's when we went crazy with the Fed because the Fed's balance sheet went from about 2 trillion to 9 over that next several years period, which is crazy cause that's bigger than the annual budget of the US now. Think about that for a second. And we printed money then again in COVID because we had to shut down the economy. What we were doing, ideally we're chugging along going up like this, we said we're gonna stop the economy for a while, and then when we restart it, that bucket that we didn't produce, we're just gonna print money and pay people because we had to keep people safe and all the arguments that happen. However you think about the politics of that, the economics were supposed to be we'll just print enough money so we'll force the economy to borrow from its own future and keep people from having hardship during that period when the economy was shut down. Well what we did is we overprinted by a lot. And so we gave people extra money which decreases the long-term productivity, but increased the short-term savings rate, and we had inflation. Very predictably we had inflation. The middle of the country in particular, farmland values went up 50 and 60% over the two-year period in places from essentially Kansas up through the Dakotas. If you own farmland in those states, good for you.

But then we tapered it off and said okay we're done, now let's start letting the Fed's balance sheet run off. And you see that peak and we're kind of coming back down, but now we've ramped up the need to begin to monetize the debt and run the government and run the economy on jet fuel and print extra money. But there's not sort of an obvious reason. We don't have a COVID, we don't have a housing crisis. We're just adding to the debt now and that printing of M1 that's in that circled part at the end is a real problem for my grandkids. I don't know what to do about it. Don't know how to explain it exactly, but that's one that should actually give you some pause. So again, what does it mean for farmland? Well, if you're a farmland owner and that's all you care about, probably a good thing. We're going to inflate, we're going to add some money nominally to your wallet, the cost of everything's going to go up too, but generally farmland inflation is faster than the rate of CPI increase by something you'll see in a minute.

The bottom right adds a little bit more reference to what Gary was talking about in terms of prices. It's a very dense chart. I won't read it all to you, but 462 and 1109.

Announcer: You're listening to Bruce Sherrick's presentation made during the All Day Ag Outlook at the beef house in Covington, Indiana. He's the director of the TIAA Center for Farmland Research and an agricultural economist on the Urbana Champaign campus of the University of Illinois. The 462 and 1109 numbers are the crop insurance figures that were set in the month of February. We'll hear more about those in a moment.

Announcer: Todd Gleason's services are made available to WILL by University of Illinois Extension.

Todd Gleason: Let's continue now with the value of farmland presentation made by Bruce Sherrick. He had just introduced the topic of crop insurance.

Bruce Sherrick: We are about back to the long term averages for starting prices for our insurance period. This is good. Kind of. We're also at a point where futures prices are already above, by quite a bit in soybeans, the projected price. What does that mean? That means the insured revenue, which is a multiple of the projected price times your expected yield, times some election coverage, is a smaller number than today's actual expected revenue. So your insurance isn't as valuable because we're starting at a period where prices are already higher. Now on the flip side, it also increases the likelihood that your harvest price option will be in the money. About 50% of the time, minus a couple cents for a decline in basis and removal of uncertainty, about 50% of the time, the price at March 1 and the price at October 15th are on each side of each other. So you have a higher likelihood of having your revenue increase, increase this year too because we're starting at a point where the average in February came from prices that were doing this at first and then went up. So we have higher starting prices than projected prices. That's a big deal. Matters to farmland because it means you're more likely to be able to pay your cash rent or charge your tenant higher cash rent, whichever side of that equation you're on.

Next page, farmland is a beneficiary of federal policy. We've heard references to the RMA several times today, in lots of different ways, but the biggest ones include these increased subsidy levels that Gary mentioned. They're a very big deal. Now why do we need to subsidize somebody 80% to buy crop insurance? Well, in the middle of the country, because we charge them too much in the first place. So crop insurance by law is mandated to run at an actuarially fair rate, which means all the premiums you collect you're supposed to redistribute. But what's happened through time is we collect more in the middle of the country than we distribute in the middle of the country, and we distribute a lot more to cotton and rice and peanuts than we take in as premiums. So again, I'm old, I'm crotchety, I have a lot of say things like this out loud, I'll never get nominated to be on the Federal Crop Insurance Board of Directors. This is a real problem because the asymmetry in the subsidy is that you have to subsidize the middle of the country to help insurance companies make enough that they can serve the places where you're going to lose. So with a loss ratio of 2.0 and a subsidy of 50%, think of it this way. Loss ratio of 2.0 means for every dollar of premium, you get paid back two. Rice has been running above that for 10 years in a row, cotton roughly in that range, a little below. But just let me do the math in our head. So for a dollar in, you get a dollar back. But if you had a 50% payment, 50% subsidy, for every dollar of insurance, you paid 50 cents, government paid 50%, you got two dollars back. That means your personal take rate is four times as much as your personal payment. So we're getting to the point where parts of the country that we're not sitting in are getting paid a lot more per dollar of their investment in crop insurance premiums than in the middle of the country. I think that's politically viable only when your House, Senate, President, and Secretary of Ag are all focused on Texas A&M kind of information. There, again, said it out loud.

So farmland returns and inflation, that top right chart again is just really important to look at the spread of US farmland over inflation. It's been fantastic. It's been absolutely fantastic.

Bottom left, thin market, low turnover. We're still trying to refine this. This bottom chart, the reason the left hand side is blue and the right hand side is purple, there was a change in the reporting mechanism in 2011. And if we use the old one, you get the blue chart, if you use the new one, you get the orange chart. And if you look at 2011 where they overlap, they're only different by a tiny bit. But what you can say is that the turnover rate has actually declined from a low level to an even lower level. So how often does farmland turn over? Well suppose it were 2% a year. That means farmland on average is held for 50 years. If it's 1% a year, on average farmland is held 100 years. Right now it's held, Becky goes, at 65.3 years on average. So it's very slow to turn over. So when that neighbor's farm does go up for sale once in your lifetime, you may have non-economic reasons to buy it to expand and dilute your fixed costs and have a better footprint or 1031 out of that farm you didn't want to drive 32 miles for anyhow. So this is a really big deal. Illinois and Indiana are fairly similar. Iowa is actually surprisingly a little higher, not quite sure why. But these rates, what happened in 20 and 21, was it felt like a boom because you went from 1.5 to 2% turnover rate. And that's a 33% increase. So the new brokers who started their careers in 2020 and 2021 thought, this is easy. What's, I don't understand why you guys were acting like it was hard work. And now they know.

Final comments. I think ad hoc payments as the new standing program is incredibly dangerous in the long run. And it's being used right now as a political foil against other things that are going on. And we've done that for our entire history, there's nothing new about this by the way. We've gone all the way back to the 30s and post-depression. The first effort was Smoot-Hawley probably to do wide-scale tariffs, and we've done so in the US, and with trading countries around 200 times since then, and we're currently 0 for 200 in them working. So, that's a problem. So what happens though is it ends up favoring keeping poorer production regions in production. So today I heard at least 15 times, more domestic uses, more ways of increasing demand. How about we don't grow corn in West Texas? There's other solutions to this where if you let the economics drive where we would grow things. Anybody from West Texas? Good. Any media in the room? Dang, what's this WILL Ag thing? No, there's regions why we're favoring poor producing areas that we probably can't do in the long term. I'm not particularly worried about losing competitiveness to Brazil in the long run because of the increasing demand. That picture on the front page by the way, five of the ten most populous countries will be in Western Africa by the year 2100. That's true. We're pretty good at forecasting populations. Nigeria will overtake the US in terms of population very soon, India has already overtaken China, and that area that is going to have the biggest source of increased demand will have to be fed by areas in the Middle East, and the Fertile Crescent, and then by Brazil, and then by Australia, and then by the US.

So I think the increase in demand that's natural and economically justified is the things we should concentrate on, not looking for new subsidies to produce something or change something or pay somebody or add a second mailbox. Trade sensitivity increasingly critical because we're not changing where we can grow things and we're not changing where people are. And it's true folly to suggest that we should all lock up our borders and grow all of our bananas and coffee in the US for example, or export almonds only to the interior states. So trade deficits are neither good nor bad. This is a really important one. Trade deficits aren't good or bad. They just reflect different costs of capital, and the lower the cost of capital the more the productivity means your standard of living goes up. So if we can trade corn, historically we traded corn for really high-quality cars from Germany and Japan. And then things changed in both economies and we stopped trading in that way, but we can still trade things we're better at producing, which include grains. But again, trade deficits aren't good or bad. They really aren't. They're just a consequence of things working correctly if you have open trade and resources that can compete freely with each other. Long-term prospects really favor the US and Brazil, short-term prospects do not. Don't favor either. Medium-term prospects really favor these other regions that are beginning to develop. Within region, New Zealand, Australia to Southeast Asia for example. Again, remember there's, you know, more than a billion people. What's the largest city in the US? Largest city in the world now? Not New York. Somebody said Tokyo? Nope, used to be. Dubai? Jakarta. Who said Jakarta? Give him a hat, that was a great answer. Jakarta is now the largest city in the world. Tariffs are really bad for agriculture through the deadweight loss even if they favor a particular exchange at a point in time. So again, if this is just proven time and time again, if we have downward sloping demand curves, which we do, if you raise the price of things you buy less, and if you have upward sloping supply curves, which we do, if you raise the price of things we make more of them, then you can't take one bucket of water and redistribute it across two buckets and have more water. So we have to be very careful about how long we do this. Tariffs have a very good political purpose sometimes and people have used them for lots of reasons. If you want to favored outcome, it's not the least efficient way to favor something. That's true as well. I'm not being like negative or positive, I'm just being an economist. On the one hand, the one hand.

Decarbonization. So how many of you have a solar lease option on your farm? That you're willing to say. These are great things. We have about eight times as much area leased for potential development as we could ever potentially develop. And that's going away a little bit in terms of the decarbonization incentives in the economy, but when they do happen they favor very small locations, and don't favor a bigger area, but the total value of everything actually goes up. And this is a funny thing because I don't want one in my backyard necessarily, or I want to own a wind tower but not in my own backyard, those kinds of things are also real. But I often get like just pummeled over this argument around solar. And so my new way of saying solar, and use solar as a metaphor for all these decarbonized or low intensity kinds of projects. You have to forgive me for a second because English isn't my first language. But if we took the entire state of Illinois, and covered the farmland with solar panels. Would the cost of energy go down by more than the cost of food would go up? It turns out, by the elasticity of demand arguments we can make, that the cost of power would go down by more than the cost of food would go up. Okay? Wait, I said state, I'm sorry, English is a really hard language. I meant county. If we took all the solar panels in one county... would the cost of power go down by more than the cost of food... well it also holds, and the lower you get the more that holds. Right? And a county. A county is one of those things that if you put a bunch of them together you get a township, right? Oh, it's the other way around. Township, I meant if we, if we covered up a township, that's what I meant. I'm sorry, English is such a hard language. So if we covered up just one township with solar panels, would the cost of electricity go down by more than the cost of food would go up, and the answer is unambiguously yes. And a township is like a mile by a mile, right? You put a bunch of them together you get a section? Ah dang it, this English thing is so hard. So if you take a section and cover it with solar, what happens? Well, the value of all the rest of the farmland goes up by some amount, the value of all the other things you were using to produce electricity goes down by a certain amount, but the total value of everything went up, the sum of everything was still higher. So, I recognize that it's a complicated thing because if you ask people about this, by the time you get down to about the township they go, I don't like that. I don't want it. And they get to their own farm and it's like, well wait a minute. I'm going to get $100 million for a data center powered by solar... I'll buy a farm somewhere else. Right? So it's a complicated trade-off, but I think the decarbonization has been de-emphasized to the point that economics will begin to take over. Instead of just saying where are we going to subsidize it, how are we going to have a generation credit, how are we going to do this, that, and the other, and as soon as you have the economics take over I'm in favor of it. Because then it'll only happen where it should.

The period we're in now is incredibly politically charged, right? So if you go from Indiana to Illinois to Iowa, which are the three states I probably spend the most time in honestly, the color of hat you have to wear changes three times, right? And you can say exactly the same thing and be thought of as well you're to the left of Bernie Sanders, or you're to the right of Attila the Hun. And I said I said the same thing both places. So I think this politically charged environment we're in where it's difficult to have the conversation without talking about politics is a really complicated time, but it's also an important time to make the decisions right. I think this is going to continue through at least the mid-terms. We're going to continue to have things that look like, why did we do that kind of outcomes in the Senate Ag Committee a lot.

Capital gains will always exceed long term income, and it's highly tax efficient, and if it's not the only asset you own, what asset would you rather own becomes the punchline that I've been able to say for at least 20 years now. So even in the periods where the returns today were kind of low, nobody wants to sell me the farm that they own for a price that is equal to the average price of all the other farms like theirs in the area, because it's just not how we think about farmland. And so it does have unique features that are non-economical, I get that, I support it. But in the long run, and again somebody asked over here too about what's your view on farmland values, I'm still looking for farmland. So auctions right now are going crazy where you'll have a choice auction, five parcels, all 140 PI, or 95 CSR, something really highly productive. And the first one will go for 16,500, the next one will go for 16,000, the next one will go for 13,000, and the next one will go for 12,900, and they were all the same productivity. And so this variation around the price at which you can buy things has never been greater, the average hasn't changed as much as people want to consider like a good headline. It's not a fun headline to say, ah, farmland markets are still boring. So we haven't had this massive retrenchment, we've had less of the high-priced sales because as we shrunk the volume of sales, the opportunistic sales are less frequent. Low-quality farmland, which is somewhat the bellwether of what income can be capitalized into in the long run, has continued its slow prod upward, and then the high price ones over top of it are doing their little dolphin dances over top of that line. So in 20 years from now, 50 years from now, 100 years from now, my kids, grandkids, and if they have kids, their grandkids and so on, are going to be very, very happy if I could figure out a way to buy more farmland.

Todd Gleason: Paul Cooley asked this morning, Joanna, when she finished up, where would she if she had 5 million dollars, were you here for that?

Bruce Sherrick: Mhm, I was. Yeah.

Todd Gleason: To buy farmland. I know what I said in my head, what did you say?

Bruce Sherrick: All right, so I scaled it up. I said 5 million is something that I could conceive of with, you know, that's a farm or two, something. So I want to ask the question differently and ask you all to think about it this way too cause 5 million your own farmland you're just gonna buy something beside you, cause you want to be able to do it. As an investment, in the US I would go the Pacific Northwest. Second I would go to Illinois or Indiana. I actually like if you go just across into Indiana at about Duquoin or that kind of level up on the go into Indiana so west of, west of Purdue. Um, and then it would be opportunistic. If I had a hundred and fifty million dollars to manage for a pension fund, the answer is really quite different. You want that answer?

Todd Gleason: I do. Will you be on a different continent?

Bruce Sherrick: Yes, I will. Yeah. So so the Canadians have for a very long time recognized that the dollar, US dollar, Canada is somewhat range-bound between sort of like a dollar and a dollar thirty, dollar twenty-five, something like that. And so the three major pension funds in Canada have been very good at buying when the Canadian dollar is cheap and selling when it's relatively expensive and just basically using it as a currency that's the original stable coin. But you can buy farmland with another currency, it's the original stable coin for all those of you who are studying stable coin. From the north to south across the equator where you have two different time zones, the agricultural products I will buy will include things like bananas and blueberries and strawberries and things we want 12 months a year. And there's a big area in the northeast corner of Australia that's actually still quite productive and still growing bananas. Central America is politically really challenging, parts of South America for coffee and parts of Brazil. And if I had Abu Dhabi money, like the Abu Dhabi Investment Authority ADIA, their minimum check size I think now is 500 million and they like to put a billion in anything. Or if I'm the Mormon Church with a five billion dollar mandate, then I have an Australian, Brazil, US strategy for sure. And most of it in the US still. That's the thing that the markets will be increasingly good at solving through time. And that's my punch line: is I think the markets, I think all the macro big things in the long term are much, much more powerful than the short-term disruptions and chaos that we can point to. And they're also much bigger than the size of the current checks we might happen to get. So in the long run I'm still very bullish. The next five years, I have no idea.

Todd Gleason: That's Bruce Sherrick from a presentation he made during the 2026 All Day Ag Outlook at the beef house in Covington, Indiana during the month of March, talking about the value of farmland. You may hear this program again in the Friday edition of the closing market report at Illinois Public Media's website, willag.org. That's for agriculture, willag.org. I'm Illinois Extension's Todd Gleason.