Farmers are beginning to regard energy production on their land, such as solar, wind, and carbon capture usage, as a factor in driving land values upward, said a Purdue University survey on Tuesday. The survey also found more farmers are exploring leases for solar production, and that lease rates are going higher and higher.
“These results suggest that lease rates being offered for energy production could provide some support for farmland values and farmland value expectations,” said Purdue’s James Mintert and Michael Langemeier, who oversee the monthly Ag Economy Baromter.
The barometer, a gauge of farmer sentiment, suffered a springtime slump in its latest survey, falling by 14 points to a reading of 99, the lowest since June 2020. The financial outlook for the coming year darkened during April, said Purdue. The barometer also declined during spring 2019, 2020, 2022, and 2023.
Five percent of respondents named “energy production” as the main reason they expected higher farmland values in the future. It was the first time the Ag Barometer reported energy production as a factor in land values.
One in five producers said they were actively involved in discussions about leasing farmland for solar generation of electricity, compared to one in seven in April 2023. Some 58% said they were offered at least $1,000 an acre, said the barometer. Half as many operators — 27% — were offered that amount in June 2021.
Bids to lease land for solar were on the rise this spring. In March, 54% of producers said they were offered at least $1,000 an acre, four percentage points lower than the April figure.
A record 33 gigawatts of solar capacity was installed last year, raising the nationwide total to 162.8 gigawatts, according to a solar trade group.
For the Ag Barometer, Purdue interviews 400 operators with production worth at least $500,000 a year. According to USDA data, 7.4% of U.S. farms have annual sales of $500,000 or more. The survey has a margin of error of plus or minus 5%. The latest survey was conducted from April 8-12.
The Ag Economy Barometer is available here.
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