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Indiana’s Farmland Values Up Again In 2013
Thursday, August 29, 2013 WEST LAFAYETTE, Ind. — Last year’s drought did little to slow the pace of rising farmland values and cash rents. They are up this year in a big way again, according to a Purdue University study. Drought last year sent corn and soybean prices soaring to all-time highs, which, along with crop insurance indemnities, meant better-than-expected farm incomes. High net farm income, low interest rates and high farmland demand with limited supply combined to push the state’s land values upward by anywhere from 14.7 to 19.1 percent, depending on productivity. Statewide cash rents increased by 9.4 to 10.9 percent. “While the 2012 Indiana crop suffered from the worst drought since 1988, the increase in farmland values did not bother to slow down,” said Craig Dobbins, Purdue Extension agricultural economist. The biggest increases were in high-productivity land, which jumped by 19.1 percent to $9,177 per acre. Average-productivity land increased 17.1 percent to $7,446 per acre, and poor-productivity land was up by 14.7 percent to $5,750 per acre. Land values, cash rents and farmland productivity were estimated for the study by surveying Indiana rural appraisers, agricultural loan officers, Farm Service Agency personnel, farm managers and farmers. The 261 respondents were asked to estimate long-term corn yields for poor, average and top-quality land. The state’s average long-term corn yields for poor, average and top-quality land were 127, 160 and 193 bushels per acre, respectively. Another area that saw growth is the transitional land market, Dobbins said. “The transitional land market — that is, farmland moving out of agriculture — seems to have sprung back to life,” he said. “This is a specialized market, with transitional land value strongly influenced by the planned use and location.” Overall, the survey showed a 24.4 percent increase in average transitional land value, up to $10,581 per acre. However, the estimated values from the 2013 survey varied widely — from $2,500 to $45,000 per acre. The median value was $9,500 per acre — $1,500 per acre more than in 2012. “Because of the wide variation in transitional land values, the median value might give a more meaningful picture than the average,” Dobbins said. Cash rents increased statewide, with the largest jump found in high-productivity land. Top-quality land increased by 10.9 percent or $29 per acre. Rent for average-quality land was up by 10.1 percent, or $21 per acre, and rent for poor-quality land was up 9.4 percent, or $15 per acre. The survey also assessed expectations for where farmland values and cash rents are headed in the future. Dobbins said the consensus is that increases will slow and, in some regions, values might stall or decline slightly. Forty-three percent of the survey participants said they thought farmland values would increase by an average 11.7 percent over the next five years. That means they expect an average annual increase of 2.2 percent. Thirty-five percent of the respondents thought farmland values would decline by an average of 12.3 percent over the next five years — an annual decline of 2.3 percent. The remaining 22 percent expected no change. Continue reading
Farmland Values Keep Rising
Published August 06, 2013 Farmland values keep rising GRAND FORKS, N.D. — The 2012 drought that devastated crops and pastures in much of the upper Midwest didn’t stop the price of farmland from shooting higher, especially in North Dakota. By: Jonathan Knutson , Forum News Service GRAND FORKS, N.D. — The 2012 drought that devastated crops and pastures in much of the upper Midwest didn’t stop the price of farmland from shooting higher, especially in North Dakota. The average per-acre price of cropland in 2013 in North Dakota soared to $1,910, a whopping 41.5 percent increase from the previous year, according to an annual report issued Aug. 2 by the National Agricultural Statistics Service, an arm of the U.S. Department of Agriculture. Nationally, the average per-acre price of cropland rose 13 percent, NASS says. “I think North Dakota had some catching up to do,” says Dwight Aakre, farm management specialist with the North Dakota State University Extension Service in Fargo. Prices for North Dakota cropland had, in past years, risen slower than prices for cropland in many other states, leading to a “catch-up” this year, he notes. He also notes that much of North Dakota enjoyed good yields in 2012, despite the drought. Aakre says that while North Dakota cropland values undoubtedly rose sharply in the past year, he was surprised to see the NASS estimate of a 41.5 percent increase. “That’s a lot. But you don’t argue with USDA. It has the best numbers,” he says. The report is based on a survey of agricultural producers in the first two weeks of June. Most other states in the upper Midwest also saw substantial increases in cropland values in the past year, according to NASS. Cropland values in South Dakota shot to an average of $3,020 per acre, an increase of 30.2 percent. The average value of Minnesota cropland rose to $4,850 per acre, 19.8 percent more than a year earlier. In Montana, the average value of cropland rose 4 percent to $888. The state grows little corn, which experts say has contributed to rising land prices in the upper Midwest. Average cropland values rose sharply in 2013 in the drought-hammered Corn Belt. In Iowa, for instance, the average value of cropland increased 17.8 percent to $8,600 per acre, according to the report. Though drought hurt production, it also caused the price of corn to rise, encouraging farmers to pay more for land, Aakre says. Low interest rates, which reduce the appeal of competing investments such as CDs, also have contributed to rising land prices, though to a lesser extent than high crop prices, he says. Now, however, crop prices are slumping, and buying land is becoming less attractive, he says. “I think land prices have peaked,” Aakre says. Paying more for pasture NASS also found substantial increases in pasture prices. Nationally, the average value of pasture rose 4.3 percent to $1,200 per acre. North Dakota’s average pasture value rose 28.6 percent to $630 per acre. In Minnesota, the average pasture value rose 16.7 percent to $1,750 per acre. South Dakota’s average pasture value rose 20.3 percent to $710 per acre. High crop prices have encouraged some producers to begin raising crops on land that once was pastured. That reduces the supply of pasture and drives up its price, experts say. The average value of Montana pasture rose 1.8 percent to $580. NASS includes Montana in the report’s mountain region, which also consists of Arizona, Colorado, Idaho, Nevada, New Mexico, Utah and Wyoming. All the states in the region had small annual increases, or even small decreases, in their average pasture price. Cash rents rise, too In a separate report on Aug. 2, NASS released updated state-level statistics for cash rents. Here are average per-acre cash rents for nonirrigated farmland for 2013. – United States – $125 per acre, up from $115 a year ago. – North Dakota – $64 per acre, up from $57 per acre a year ago. – South Dakota – $104, up from $93 per acre last year. – Minnesota – $177, up from $150 per acre last year. – Montana – $23.50, up from $23 per acre a year ago. Strong crop prices in recent years have helped boost cash rents, Aakre says. – See more at: http://www.prairiebi…h.SMUTWfnp.dpuf Continue reading
