Jul 10 | Closing Market Report

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The July 10, 2026, broadcast of the Closing Market Report highlights University of Illinois agricultural research and economic analysis. The program begins with an interview featuring soybean breeder Eliana Monteverde, who details how her team utilizes the USDA germplasm bank to develop new commercial soybean varieties with stacked pest resistance and modified amino acid profiles. Following this, the broadcast presents a comprehensive presentation by agricultural economist Bruce Sherrick on the macroeconomic drivers of farmland values. Sherrick examines how factors such as global production disparities, domestic inflation, crop insurance subsidies, and renewable energy land-use influence the long-term investment stability and profitability of agricultural real estate.

01:36 Soybean Breeding Research and a Field Day with Eliana Monteverde, University of Illinois
14:42 Land Values Discussion with Bruce Sherrick, University of Illinois

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Todd Gleason: From the Land Grant University in Urbana-Champaign, Illinois, this is the Closing Market Report for the 10th day of July 2026. I’m University of Illinois Extension’s Todd Gleason, away from the office today, so no update of the 11:00 AM USDA reports that were released this morning. Those would be the WASDE or World Agricultural Supply and Demand Estimates with the updated acreage and grain stock figures incorporated from the end of June. However, today you will hear a couple of interesting things. If you missed Bruce Sherrick in March talking about land values, you’ll hear all of that if you can stay with us for the whole hour on our home station. Otherwise, it’s up online at willag.org right now, and you’ll hear about next week’s Illinois Soybean Association Agronomy Farm Field Day that will be held in Heyworth. Actually, we’ll talk with Eliana Monteverde. She’s the soybean breeder here on campus. A really interesting discussion about soybean breeding and how this is incorporated into the seeds being used today in your fields and a library of genetics from which those are obtained. You’ll want to hear all of that right here on this Friday edition of the Closing Market Report from Illinois Public Media. It is public radio for the farming world, online, on demand, at willag.org. Todd Gleason’s services are made available to WILL by University of Illinois Extension.

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

01:36 Soybean Breeding Research and a Field Day with Eliana Monteverde, University of Illinois
Todd Gleason: Next Thursday afternoon, July 16, the Illinois Soybean Association will host a field day near Heyworth, just south of Bloomington-Normal. You may find a link to register for this event in the calendar on our website at willag.org. Click it to open it. There’s a registration link there. However, it’s easiest to click again on the “more details” link at the bottom of that page to make the link hot when it opens for a second time. I think you should go, if only to meet Eliana Monteverde. She’s in charge of the soybean breeding program here at the University of Illinois. It’s dedicated to developing and releasing high-yielding commodity and specialty soybean varieties that meet the evolving needs of farmers, processors, and consumers. I called and asked her what that means.

Eliana Monteverde: So, our varieties, the way we work, that the university works, is that we license varieties to other companies. So, we don’t commercialize varieties directly. Right now, the company that commercializes most of our varieties is called Northern Star, but also we have some varieties that are high oleic, low linolenic that currently are sold by the company Beck’s Hybrids.

Todd Gleason: Tell me about these varieties that you do have, you particularly mentioned Beck’s is using some of them. When did that happen? And if it’s not widely available yet, when might you expect that to happen?

Eliana Monteverde: So, our varieties with Beck’s is a long-standing project that actually was started by the University of Missouri, and it was the development of high oleic, low linolenic soybean lines. So, these lines have a modified fatty acid profile that makes the oil healthier for cooking and also it has an extended shelf life. So, the University of Missouri, about two decades ago, they found these genes and they stacked them into varieties and they worked with other public breeding programs so we can use the trait that they developed. Originally the trait was owned by the Missouri Soybean Merchandising Council, but now that patent was transferred to Beck’s Hybrids like a year ago. So, that means that all the varieties that as a university we developed with that trait, Beck’s is the company that commercializes them.

Todd Gleason: Interesting. Do you know the history of that particular gene? Was it part of the PIs the USDA houses?

Eliana Monteverde: Yes, that’s a different trait though. But it was part of the public introductions that are housed at the University of Illinois. Exactly. So, for the high oleic, low linolenic it is actually four genes and those come from PIs that are from the germplasm bank here in Illinois on campus that is managed by the USDA. And I think this is mostly true for most new soybean genes that we discover. The vast majority of them come from those PIs that are in that bank.

So, in the case of SCN, soybean cyst nematode resistance, we use those genes that come from PI 88788. That’s an accession in that bank, and that gene has been used for decades and it’s been very successful. But also we use other genes that come from other accessions from that bank, and we’re currently surveying that germplasm constantly to find new genes for resistance.

Todd Gleason: Let me interrupt here for just a moment. I turn your attention back to last Friday’s Closing Market Report, that’s the July 4 edition, where there is a history of the soybean that includes more about plant introductions, how they were collected in China, and how these accessions are stored here on this campus.

Eliana Monteverde: So we also have, I mean us and companies too, we have the Peking-type resistance. Those are another three genes that also come from an accession from that bank that is Peking, that’s the name of the accession. And yes, and then for many other genes that we work with, such as aphid resistance, they also come from those accessions too. I was just going to add that we have many other examples of genes that come from those very, very old accessions that work as a library for us. They work as a library of genes so we can go and search for new traits constantly.

Todd Gleason: Those, most of them, were collected from China and other places at the start of the last century, in the 30s and 40s thereabouts. Do commercial entities look into them or do they rely on soybean breeders like yourself, geneticists at university systems, to do that?

Eliana Monteverde: That’s pretty much the case, and it has been the case historically. So, the main thing is that once we discover these genes, since these accessions are very old and they come from China as you said, they’re usually not adapted to Illinois conditions and also they have very low yields too. So, in the public network what we do is we try to—through a process that takes years of lab and greenhouse and field work—put those genes into our already high-performing lines, and that process takes a lot of time and a lot of resources to do. And then companies license them. Once we have varieties that are high yielding, adapted, and have those genes, companies license those lines usually to use as parents in their own breeding programs. So, that’s part of the work that public breeders do because usually it takes a lot of time to introgression those genes into high yielding varieties, and that’s usually something that companies don’t really want to do if we already provide that for them.

Todd Gleason: Thursday, July 16, you will be presenting at the Illinois Soybean Association Agronomy Farm Field Day outside of Heyworth. I’m wondering what you’ll be telling producers that are in attendance.

Eliana Monteverde: Yes. So, I’m going to talk about the projects that they are already funding. The Illinois Soybean Association is funding three projects for us. One is the development of high oleic, low linolenic lines. We have some demo plots there with our varieties that are planted at their farm. So, I’m going to show them advances in these lines, our new releases, and then we’re going to look at them in the field.

The other project is with SCN resistance. So, we are trying to add or stack more SCN resistance genes into high-yielding varieties, and we have some of those varieties planted there too.

Then the third project, which we are not going to show anything in the field for, is about studying seed composition traits or amino acid profiles in different varieties, just to see how these amino acid profiles are affected both by genetics but also by environmental factors. And also, I’m going to show very briefly how a breeding pipeline works and why it takes so much time and resources to develop new varieties.

Todd Gleason: Two final questions. One, when you say stacker, have we had an issue trying to stack Peking and PI 88788? Is that what you’re hoping to do or are there other genes that you’re looking at?

Eliana Monteverde: Right, so it’s not impossible, but the way varieties work right now, we can’t put together Peking and 88788 because one of the genes that confer resistance both in Peking and 88788 is the same gene. It’s just different variants of the gene, so you can’t put those two together and sell them as a pure line. That can’t be done. But what we’re trying to do is, on both sources of resistance, we’re trying to stack or add more genes to those two. There’s already a lot of research done, and we’re still doing more research on what gene combinations work best for different races, or HG types as they’re called, of the pathogen.

Todd Gleason: And on the amino acid side, are you just working towards total protein content or are you looking at the amino acids and how they can be varied within the soybean?

Eliana Monteverde: Right, it’s actually both. Since amino acids are the components of proteins, if you increase total protein content, then you will increase total amino acid content. But also the idea is to see that there are some amino acids that are, let’s say, more important than others, or we call them essential amino acids. Those are amino acids that are very important for a certain species, identified for cattle, for fish, or for poultry, and also for humans too. And they might not be the same. There are also other amino acids that protect the meal after processing too. Usually those amino acids are in very low concentrations in soybean, which sometimes means meal plants have to add those amino acids artificially.

So the idea is first to develop a method that makes it easier and cheaper to measure them on one side, but also to first characterize the variation for different amino acids in our own germplasm, and then how these amino acids vary under different environmental conditions. These are trials that are done in many different locations. And then of course the end goal is to see if we can try to increase certain amino acids too. But of course, total protein content is always an objective.

Todd Gleason: Your work is so intriguing. Thank you for taking time with me. I really appreciate it.

Eliana Monteverde: Thank you.

Todd Gleason: That’s Eliana Monteverde. She will be presenting next week at the Illinois Soybean Association Agronomy Farm Field Day. It’s outside of Heyworth. Check out the Illinois Soybean Association page, actually our own page too at willag.org. You’ll find the registration link there. It’s in our calendar of events, or you can just search Illinois Soybean Association Agronomy Farm Field Day and Heyworth. You’re listening to the Closing Market Report from Illinois Public Media, online, on demand, at willag.org. Our theme music is written, performed, produced, and courtesy of Logan County, Illinois farmer Tim Gleason. Up next, land values and the Center for Farmland Research right here on the UI campus.

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

14:42 Land Values Discussion with Bruce Sherrick, University of Illinois
Todd Gleason: 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 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’s 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. In 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. 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 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? And they’ll say, “None.” Well, no, actually.

So 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 land mass 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’ve 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. 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 it 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 80-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 8, 10, and 12-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 weave through the conversation today. It’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 me 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 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 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 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 or 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, combined 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. If I did 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 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, it’s 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 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 4 or 5% 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. 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 stamps 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 will 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 them a second mailbox. 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, so the quality goes 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 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 we’ll do that after we leave so you’re not throwing tomatoes at me or something. But the average cropland return for farmland on any 10-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, dotcom, 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 that say Illinois Land Values 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. 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 a National Land Values Report, published 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 Corn Belt is 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 help maintain has grown to about $20 billion in farms that we can track. It’s really good. And average annual return from that entire period ’91 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 of 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 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 because 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 going to stop the economy for a while, and then when we restart it that bucket that we didn’t produce, we’re just going to 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, were 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 add some money nominally to your wallet, the cost of everything is 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 4.62 and 11.09…

Todd Gleason: You’re listening to Bruce Sherrick’s presentation made during the 2026 All 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 4.62 and 11.09 numbers are the crop insurance figures that were set in the month of February. We’ll hear more about those in a moment.

announce: 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. 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 of 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 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 as a beneficiary of federal policy. We’ve heard references to the O3BA 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’m allowed to say things like this out loud, I’ll never get nominated to be on the Farm Credit 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 so we 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, I can say it out loud.

So farmland returns in inflation at the top left, again just the subsidy, the old ones and the new rates, also the O3BA expanded depreciation and bonus depreciation, this really matters if you can buy farmland in an OZ, because you can use capital gains to buy the farmland, make capital improvements, add that to your basis, push everything else down to zero and then at the end of the 10 years not pay tax on any of it. Sell the whole thing as though it’s tax free and the best part of that is you didn’t have to die first. That’s also a big deal. If you also have not heard of a 721 or an operational partnership unit, there are other ways of putting farmland into structures that you can take at least your basis back out without paying capital gains.

A farmland returns in 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, was it 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 poor 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. Again, anybody from West Texas? Good. Any media in the room? Dang, what’s this WILL ag thing? No, there’s reasons 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 10 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 that 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. 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 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 world now? Not New York, somebody said Tokyo? Nope, used to be. Dubai? Jakarta. Who said Jakarta? Give them a hat. That was a great answer. Jakarta is now the largest city anywhere.

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 it has been proven time and time again, if we have downward sloping demand curves, which we do, if you raise the price on 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 a 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, on 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 a very small location 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 kind of things are also real. But I often get pummeled over this argument around solar.

So you’ll 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, 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 and covered… would the cost of power go down by more than the cost… 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 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, 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 use 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 get, “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 tradeoff, 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, the other. And as soon as you have the economics take over, then 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 right, I said the same thing in 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 midterm. 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, you know, consider 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 price 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.

I do think that it’s true, economists always make the joke that if you give a number don’t give a date, if you give a date don’t give a number, and if you happen to be right don’t act surprised. But I think farmland will continue to be, on these charts, near the top of the return through time. I think farmland’s returns will have low volatility compared to almost anything else you can buy, and I don’t think it should be 100% of your portfolio. In the long term, if we don’t fully screw up trade, the US and Brazil will both end up supplying an increasingly large part of the world and it’s not an us or them thing only. Now it is very competitive between the two and eventually, if you might hold up your hand too, I have a student from Brazil here too, studying how that different effect from the US and Brazil, how that’s playing out in actual markets. What are the differences if you took a soybean and put it in China, or put a soybean in Africa, or put a soybean in Europe, or put a soybean somewhere else, and it didn’t know where it came from? How much is it worth? That’s the thing that the markets will be increasingly good at solving through time. And that’s my punchline. 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: Paul Cooley asked this morning, Joanna, when she finished up, where would she, if she had $5 million, were you here for that?

Bruce Sherrick: I was. Yeah.

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

Bruce Sherrick: Alright, so I scaled it up. I said $5 million is something that I could conceive of with… 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. 5 million, your own farmland, you’re just going to buy something beside you because 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, I go into Indiana, so west of West Purdue. And then it would be opportunistic. If I had $150 million 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. I’d be on two different continents. 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. And this is not meant as a joke, it was the original stablecoin. You could buy farmland with another currency. It’s the original stablecoin for all those of you who are studying stablecoins.

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 5 billion dollar mandate, then I have an Australian, Brazil, US strategy for sure. And most of it in the US still.

Todd Gleason: That’s Bruce Sherrick from a presentation he made during the 2026 All 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.