Agricultural Economics Department
Date of this Version
6-1997
Document Type
Article
Abstract
Agricultural real estate values in Nebraska rose an average of 7.6 percent during the year ending February 1, 1997, with the all-land average value climbing to $654 per acre. This represented the tenth consecutive year of value increases, but the percentage increase was the largest for the all-state average since 1988. The basis of these findings is the UNL Farm Real Estate Market Survey now in its 20th year.
Land value increases occurred across the entire state, although largest gains were associated with cropland in the predominantly cash-grain areas. A combination offavorable crop prices, good yields in 1996, and transition payments from USDA's new farm program set the stage for gains in cropland values. But even grazing land values showed some recovery during 1996 from the previous year's value declines.
In some areas ofthe state, 1997 values for some types of agricultural land are now at historic highs- having exceeded previous peak levels experienced at the height of the "land boom" in the early 1980s. However, the 1997 all-state nominal average value is still only 87 percent of previous peak value which occurred in 1981. And in real (inflation adjusted) terms, the 1997 average value for the state is essentially identical to the real value levels of25 years ago.
According to UNL survey reporters, most market forces are exerting some upward pressure on land values--the primary ones being farm expansion interest, crop prices, and the current financial strength of landowners. Only the level of property taxes and future property tax policy were seen as somewhat negative influences upon area land values.
Cropland cash rental rates for 1997 were also up substantially from year-earlier levels--in most areas
5 to I 0 percent and even higher in some localities. Landlord interest in capturing some of the cash payments from the new federal farm program led to some of this increase in cropland rental rates. The 1997 rent levels for cropland represent historic highs in most areas of the state. In contrast to cropland, pasture rental rates for 1997 were more of a "mixed bag" of change. Rates on an AUM basis were stable with some slight increases.
· Reporters this year were asked to comment on rental rates for grazing com stalks after harvest--a common practice in several areas of the state. In some areas, the rates are as much as $1,000 for a center pivot quarter (if water and perimeter fencing are provided by the landlord). On a head-per-day basis, the average fee was $.25 per head per day with a range of rates from $.15 to $.35. If a per acre basis is used the average fee is $4.75 per acre.
Returns to land remain similar to recent years according the UNL survey reporters. Both the levels of returns and the geographic patterns of returns observed across the state have not changed markedly with the new 1997 bench-mark update.
Comments
Published by Department of Agricultural Economics Report # EC97-809S, June 1997.
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.