How to make your farm more valuable

ARTICLE SUMMARY:  Farmland values improve with the use of no-till

Farmland is often the biggest asset for a farm operation. The value of that farmland determines borrowing capacity, which is the lifeblood of growing operations. When that asset value falls, farmers have less capacity to take on loans. And with rising interest rates cutting into farmland values, some real estate professionals are predicting farmland, a historically stable investment, to flatline or even lose value over the next year. So how are growers to maintain borrowing capacity (asset value) while costs continue to rise? 

The answer is simpler than one might expect: adopt no-till. An academic study published in the American Journal of Agricultural Economics revealed that farmland where no-till is practiced has higher value. The researchers looked at large data sets of farmland values and agricultural practices and found: “Increasing no-till adoption rates has a statistically significant positive effect on agricultural land values at the county level.” In other words, the more no-till is adopted, the more valuable land becomes. 

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Why is that? What is it about no-till that increases the value of the land? No-till reduces soil organic matter loss through oxidation and erosion while protecting soil carbon from loss. It also improves soil structure to increase water holding capacity as well as infiltration and drainage of excess moisture. All of this leads to improved soil productivity, meaning more bushels per acre, even in years of drought or excess precipitation. 

While the study did not examine cover crops, it is easy to conclude that any practice that improves soil organic matter, water holding capacity, drainage, soil carbon, and biological activity would improve the productivity of the land—and thus its value. Simply put, carbon farming practices have not only agronomic benefits that solve challenges, but long-term benefits to farmland value.