22.08.2025 Opinion: Australian farmland values are at lofty heights. Research reveals this could be hurting some farmers

Professor Mohammad Reza Farzanegan (CNMS) has co-authored a study, published in Applied Economics and summarized in The Conversation, on the effects of rising farmland values in Australia. The research shows that soaring land prices, while boosting wealth for some, may undermine farm profitability and rural community sustainability.

Over recent decades, farmland values in Australia have increased more than eightfold. The study by Professor Mohammad Reza Farzanegan (CNMS) and colleagues analyzes data from 1992–2022 to examine the dynamic relationship between farm profitability and land prices. The findings reveal a feedback loop: higher farm profits tend to drive land prices upward with a lag, but these elevated prices eventually raise production, leasing, and borrowing costs, eroding profitability over time.

This dynamic not only constrains younger farmers from entering the sector but also threatens the viability of rural communities, as high land values may push experienced farmers to sell and leave the industry. The research highlights the need for policymakers to consider the long-term implications of farmland price inflation for food security, generational renewal, and sustainable agricultural practices.

The policy note in The Conversation is available here.