The average statewide value of farmland last year rose 5% in Nebraska, a considerably lower rate than in recent years. Land values and cash rental rates from Feb. 1, 2013, to Feb. 1, 2014, were released recently as part of the Nebraska Farm Real Estate Market survey, says Jim Jansen, research analyst with UNL's Department of Agricultural Economics. The average statewide farmland value was $3,195 per acre.
Jansen says the survey report is preliminary and will be finalized in June.
Survey reporters across the state reported percentage gains for all the farmland classes. "Farmland values in recent years have increased sharply," Jansen says. "The overall increase of 25% shown in the February 2013 report followed increases of 22 and 32% in the two previous years, leaving the 2013 all-land value more than double the value in early 2010."
In the last year, the largest increase by land class occurred for non-tillable grazing land, at 7%. Non-tillable grazing land includes pasture and rangeland that does not have the current potential to be converted into cropland for small grain or row crop production.
"Record high livestock prices translated into strong increases seen throughout the state for pasture and rangeland," Jansen says. "The increases in non-tillable grazing land varied greatly among the districts, with a low of 4% reported in the Northwest District to a high of 32% in the South District. The Northeast, Central, East and Southeast districts all averaged around 15%.
High future cattle prices were a strong factor fueling the increase in non-tillable grazing land, according to survey participants.
Increases in dryland cropland values also varied across the state depending upon the location and potential for irrigation. Generally, changes of less than 10% occurred in the eastern third of Nebraska for dryland cropland with or without irrigation potential. The Eastern District had a decline of 5% in the value of dryland cropland with no irrigation potential, but this should be noted as more of a negligible change given the strong increase in this district over the prior several years, Jansen says.
The western two-thirds of the state had the strongest increases in dryland cropland values, with increases averaging around 20%. Those increases are comparable to those of the eastern third of Nebraska reported by survey participants during the past several years.
Trends observed for the value of tillable grazing land are comparable to those of dryland cropland for the western two-thirds and eastern third of Nebraska, according to Jansen.
The hayland class proves to be a critical component of forage production in the state for cattle producers, he says. Increases in the value of hayland generally averaged around 10% across the districts in the current report, whereas increases ranged from 25 to 30% in the previous year, spurred by the devastating effects of the 2012 drought.
"Future changes in the value of this land class likely will be tied to the value of forages and cattle production in Nebraska," Jansen says.
Observed changes in the value of gravity irrigated and center pivot irrigated cropland ranged from 2% decreases to almost 20% increases. Weighting these ranges across the districts equated to an overall increase of about 4% for each of the two irrigation land classes.
For the prior two survey years in 2012 and 2013, the land value averages had an annual increase of about 30%. "Smaller increases in the value of irrigated cropland in 2014 suggest the market is holding steady given current expectations and commodity prices," he says.
Surveyed 2014 cash rental rates for cropland on average declined with lower commodity prices, while pasture and cow-calf pair rental rates increased significantly due to higher beef cattle prices, the lingering effects of the drought and the conversion of some marginal land to crop production.
Lower anticipated grain prices in 2014 have led to lower average cash rental rates for dryland, gravity irrigated and center pivot irrigated cropland as profit margins begin to tighten, according to Jim Jansen, research analyst for UNL's Department of Agricultural Economics.
Final results from the survey will be published in early June 2014 and will be available electronically via the Nebraska Farm Real Estate website.
Interested parties can directly contact the Agricultural Economics Department by phone: 402-472-3401 or email [email protected]
The preliminary report can be found at agecon.unl.edu/cornhuskereconomics.
Source: University of Nebraska-Lincoln