Agricultural Economics Department
Date of this Version
6-1996
Abstract
Nebraska's agricultural land values generally moved upward during the year ending February 1, 1996; although variation was rather pronounced. For the state as a whole, the increase averaged 4.5 percent and represented the ninth straight year of value increases.
Cropland values were higher throughout the state as crop commodity prices pushed to 20-year highs by the end of 1995. Dryland cropland values generally rose 5 to 6 percent, with gains of 9 percent recorded in the East District of the state. Gravity irrigated land rose an average of 5 percent while center pivot irrigated land values rose over 7 percent during the year ending February 1, 1996, a clear reflection of rising cash grain prices.
While cropland values were rising, the grazing land and hayland classes were struggling to maintain previous year's value levels. Overall, nontillable grazing land values dropped nearly 2 percent while tillable grazing land and hayland values were basically static with less than a 1 percent increase. In some districts declines as high as 4 to 5 percent were reported, reflecting a depressed cattle economy.
Characteristics of the 1995 market transactions were similar to patterns of recent years. Three out of every four transactions were purchased by active farmers, in most instances for acreage expansion. The agricultural land market is generally one of parcels rather than whole-farm units. As a result, three-fourths of the 1995 transactions were unimproved tracts without any building improvements. Even though the dollar outlay per transaction exceeded $185,000 in 1995, 40 percent were cash purchases in which no debt was incurred. Just over half of the transactions were mortgage financed.
Cash rental rates in 1996 for cropland were at or slightly above year-earlier levels in most areas of Nebraska. Pasture rental rates on an AUM basis were down somewhat in 1996 in several areas of the state.
Current annual net returns to irrigated cropland were estimated by reporters to average 6.1 percent, ranging from 5.2 to 6.9 percent across the substate areas. For dryland cropland, the estimated annual rates average 5.3 percent. Net returns to grazing land are somewhat lower, averaging just over 4 percent.
Two-thirds of the UNL survey reporters in early 1996 expected market activity for the year to be similar to year-earlier levels; while most of the others were expecting some increase in sales volume. The majority of the reporters (61 percent) were expecting land values to continue upward during the remainder of 1996, with the expected rate of change averaging 5.4 percent. Only a small percentage of reporters (2 percent) expected agricultural land values to decline during 1996.
Comments
Published by the Department of Agricultural Economics Report # EC96-809, June 1996. The website address is: http://www.agecon.unl.edu/realestate.html
The authors express appreciation to the survey reporters for their participation in the annual UNL Nebraska Farm Real Estate Market Survey. Without their input, much of the information within this report would not exist.