See national chem pricing trends in the FBN Research report
For farmers, the value of a piece of farmland extends far beyond its tillable acres, soil health, or even historical yield data.
A crucial, yet often overlooked, factor that significantly impacts land value is its proximity to vital agricultural infrastructure: grain elevators and processing plants.
This isn't just about convenience; it's about efficiency, cost savings, and ultimately, a farm's bottom line, often translating into a quantifiable premium per acre.
Grain elevators serve as the critical first stop for harvested crops, acting as collection points, storage facilities, and initial sorting centers. For a farmer, a shorter haul to the elevator means direct, tangible savings.
Consider that custom rates for hauling grain in the Midwest can average around 25-30 cents per bushel for the base rate, plus an extra 4-5 cents per bushel per mile over a certain distance (based on 2024 Kansas data). If a farm is 10 miles closer to an elevator, that could save a farmer approximately $0.40-$0.50 per bushel on a 10-mile round trip.
For a field yielding 200 bushels of corn per acre, that's a direct saving of $80-$100 per acre per harvest just in transportation costs.
Over years, these savings compound significantly, making land with such proximity inherently more valuable. Studies have shown that cropland within five miles of a grain elevator in some Northern Plains regions (like North Dakota) was valued at least $1,000 more per acre compared to land farther away.
Beyond basic collection, the presence of processing plants nearby adds another layer of value. This could include ethanol plants, feed mills, or soybean crush facilities.
Farmland located within approximately 30-50 miles (50 km) of an ethanol plant, for instance, has historically shown a price premium. Research has indicated that non-irrigated parcels within this range could see a 6.3% price premium, while irrigated parcels might command an 8.8% premium.
Furthermore, proximity to these facilities can lead to a stronger local "basis" (the difference between local cash prices and futures prices), meaning farmers often receive better prices for their crops due to reduced transportation costs for the buyer.
The presence of a consistent, high-volume buyer for specific commodities can stabilize demand and sometimes offer advantageous direct delivery contracts.
While the exact premium varies based on the type of facility, the specific commodity, and overall market conditions, land buyers and appraisers consistently factor in these "location economics."
Farmland with efficient access to these critical links in the supply chain is inherently more valuable because it offers operational advantages that directly translate into greater profitability and reduced risk for the farming operation.
In the competitive Midwestern agricultural landscape, a farm's connection to its local processing and storage infrastructure is truly a strategic asset, with quantifiable impacts on land values.
At FBN Finance, we understand that securing the right land with the right land financing is fundamental to a farmer's success and future.
With your unique needs at the forefront of our mission, we've developed our land financing solutions to offer competitive rates and flexible terms that can extend up to 30 years, perfectly aligning with your farm's cash flow cycles.
We prioritize a streamlined, digital application process, often providing quick decisions, so you can act decisively on opportunities, whether you're purchasing new ground, refinancing existing debt for a better rate, or financing essential farm improvements.
We even offer innovative programs like our Regenerative Agriculture Finance Land Loan, providing interest rate reductions for farmers committed to sustainable practices.
Implement your crop marketing plan with confidence by signing up for FBN’s Market Advisory Essentials, where you’ll gain access to grain market insights, recommendations, and alerts. Get matched with a personal risk management advisor through Market Advisory Pro to receive customized strategies for your operation based on your risk profile and goals, a weekly visualized risk report, a market newsletter, a customized basis tearsheet, and text market updates.
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