Agricultural Economics Department
Date of this Version
6-2001
Document Type
Article
Abstract
Despite turbulent economic conditions in the state's agricultural sector, Nebraska's agricultural land values and cash rent levels remain on a generally stable course. In the February 2001 UNL Nebraska Farm Real Estate Developments Survey, the all-land average of $709 per acre was up 1.5 percent from year-earlier levels. Together with all-land average changes of the previous two years, the 2001 level is essentially unchanged from early 1998 value levels.
While the overall value level has been steady, the "choppiness of economic waters" is reflected in modest value movements in both directions across various land types and regions of the state. As expected, the state's cropland classes experienced relatively small value changes- a clear reflection of persistently low crop prices and income shortfalls buffered in part by major dollar transfusions from federal farm commodity programs. Had it not been for the latter, cropland values, in all likelihood, would have moved downward significantly.
In contrast, a profitable cattle economy helped to fuel some value increases of 4 to 6 percent for the grazing and forage land classes. This strength was particularly evident in the major range areas of the state where livestock represents a significant component of the agricultural economy. In many areas of the state, the 2001 values for these land classes represent historical highs- quite different from the various cropland classes where historical value highs were recorded 20 years previously.
According to UNL reporters, major factors contributing upward strength to agricultural land values in early 2001 were: purchases for farm expansion; "1031" tax exchanges; non-farmer investor interest; and federal farm program policy. Major factors dampering the market and contributing to downward pressures on values, according to UNL survey reporters, were: property taxes and current crop prices.
Based on actual sales occurring during the year 2000, active farmers accounted for 75 percent of the purchases of agricultural parcels; the vast majority being for expanding the acreage base of existing operations. In contrast, active farmers only represented a small portion of the seller side of the market in 2000.
Similar to recent years, nearly half of the sales in the year 2000 were cash purchases with no debt financing involved- despite the fact that the dollar value of these acquisitions averaged more than $200,000 per parcel in every region of the state.
The general steadiness of values over recent months is reflected in the cash rental market as well. For cropland classes, the 2001 per-acre cash rental rates are generally similar to those of the past few years. Some modest movements, both upward and downward, can be observed without a discernible directional trend. Demand for cropland to cash rent remains strong and, therefore 2001 rents were not negotiated downward, despite the fact that tenants are facing higher input costs and reduced federal farm program payments in 2001.
Demand for forage land remain strong in 2001, which has kept pasture rental rates at historical highs.
Comments
Published by the Department of Agricultural Economics, Report # EC 01-809-S, June 2001.
Sincere appreciation goes to the survey reporters for their participation in the annual UNL Nebraska Farm Real Estate Market Survey. Without their valuable input, much of the information within this report would not exist.