Center for Agriculture and the Economy
Leveraging expertise from the Kansas City Fed, the Center provides timely analysis of industry developments and conducts ongoing research on the agricultural economy.
Long-term Farmland Appreciation May Remain Attractive to Some Buyers
By Ty Kreitman
August 27, 2026
U.S. farmland real estate values have stayed strong despite tightening in farm financial conditions. While the expected return on farmland from cash rents has declined as land values have outpaced increases in rental rates, long-term appreciation has remained relatively steady. The capitalization rate on nonirrigated cropland dropped slightly below the 10-year moving average yield on 10-year U.S. bonds in the second quarter of 2026 (dark blue and purple lines). However, the 10-year moving average of annual appreciation in land values (green line) remained more than 1.25 percentage points higher. Over the past decade, average land appreciation has also exceeded average yields on inflation adjusted 10-year bonds by about 3.5 percentage points (light blue line). Farmers have remained the primary buyers of land in most major agricultural regions and the long-term prospects have potentially remained attractive when considering inflation and alternative investments.
Note: The capitalization rate is calculated as cash rent on nonirrigated cropland divided by the value of nonirrigated cropland. The appreciation of farmland values is based on annual changes in the value of nonirrigated cropland.
Sources: Federal Reserve Survey of Agricultural Credit Conditions, Federal Reserve Board of Governors; Federal Reserve Bank of Kansas City staff calculations
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Through regular surveys, analysis and connections across the industry, the Kansas City Fed has had a longstanding focus on U.S. and global agriculture. Leveraging this expertise, the Center for Agriculture and the Economy serves as a resource within the Federal Reserve System by providing timely analysis of industry developments and conducting ongoing research on the agricultural economy. The Kansas City Fed is committed to understanding developments in the agricultural economy and gathering perspectives from rural America in order to include them in discussions on the national economy.
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