Agricultural Economics Department
Date of this Version
8-2003
Abstract
For the year ending February 1, 2003, Nebraska's agricultural land values showed a slight over-all increase of just over 1 percent; but with considerable variation across the State and by type of land. Based on UNL's 2003 Nebraska Farm Real Estate Market Survey, sub-state regional all-land changes ranged from a 6.6 percent decline in the Southwest to gains of 4.6 percent for the 12-month period in the Cental and East. The relative severity of the prolonged drought during 2002 appears to be a contributing factor to these regional value patterns. Similarly, drought impacts resulted in considerable variations in value changes across the land classes as well; with reported double-digit value declines for dryland cropland in the North and both irrigated land classes in the Southwest, while double-digit increases were reported for hayland in the central and East.
For the past several years, agricultural land values in the state have been moving upward slightly in nominal terms. However, in real or deflated cropland values, the pattern has remained roughly constant since 1997.
Survey reporters in 2003, estimated that 70 percent of the buyers were intending to farm the land purchases themselves (in most cases as an add-on unit to an existing operation) while another 25 percent of the buyers intended to rent out their purchased parcels to farmer tenants. As for primary seller motivation, recent sales were about evenly split among four categories: estate settlement; retirement/health; financial problems; and economic profit taking.
Of the actual transactions for 2002 for which survey reporters provided specific detail, nearly half (47 percent) of the transactions were for cash, a level that has remained largely unchanged over the past decade. More than three out of every five buyers were active farmer/ranchers in 2002; however the incidence of local non-farmer buyers and other non-local buyers in not insignificant in today's market.
Cash rental rate levels for 2003 appeared to have remained fairly stable to slightly lower compared with year-earlier levels, a pattern that is consistent with the general stability of land values. Supply/demand dynamics generally keep local cash rent levels fairly stable from year to year, despite weather and other income-influencing factors. However, when asked to estimate net rates of return to agricultural land, the 2003 reporters indicated some decline for 2003 for each of the three land classes- a continuation of a gradual downturn that has been evident for the past several years.
Comments
Publication by Nebraska Cooperative Extension EC 03-809-S, August 2003. Website address is http://agecon.unl.edu/realestate.
The Authors express their appreciation to the survey reporters for their participation and returning the Nebraska farm real estate Market survey questionnaire. Without their efforts and interest, the availability and publication of the data within this report would not be possible.