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Monday, August 09, 2010

Land Values and Cash Rents:  Going Up, While Other Costs Decline


Both land values and cash rents around the Cornbelt edged higher from 2009 into 2010, despite recessionary pressures that kept most input prices lower. While USDA’s report on production costs last week indicated the first decline from year to year since 1986, landowners paid more for farmland and wanted more cash rent from farm operators.

The US Department of Agriculture’s Summary of Land Values and Cash Rents provides state average data, for crop and pastureland individually and combined, as well as five year trends. Nationally, cropland values rose 1.1% to $2,700 per acre, and total farm real estate values, which includes land and buildings, was up 1.4% to $2140 per acre.

Within the Cornbelt, cropland values were highest in IL at $4820, which was up 3.2% from 2009. IA cropland was valued at $4100, IN at $4030 and OH at $3950. NE recorded the highest upward move at 10.6% to $2410. Both KS and MN recorded upward movement in land values of more than 6%. Crop land values declined 2.1% in MI and 1.1% in WI. In the Northern Plains and Delta regions, the average cropland value increased 6.9 and 6.1 percent, respectively, from the previous year. However, in the Southeast and Mountain regions, cropland values decreased by 5.3 percent and 5.0 percent, respectively.

Farm real estate, which includes crop and pasture land, as well as farm buildings, climbed by 1.4% nationally. NE farm real estate increased by 9% to $1460, which was the highest percentage move upward. The rest of the Cornbelt also recorded higher values for farm real estate, except for MI and WI. The highest values were in IL at $4650 per acre, IN at $4100, and IA and OH, which were both valued at $3900 per acre. The highest farm real estate values remained in the Northeast region at $4,690 per acre. The Mountain region had the lowest farm real estate value, $911 per acre.

The United States pasture value was unchanged from 2009 at $1,070 per acre. The Southeast region had the largest percentage decrease in pasture value, 5.6 percent below 2009. The Northern Plains region had the highest percentage increase, 3.8 percent above 2009.

Responding to the higher values for cropland and farm real estate, land owners sought an increased level of cash rent, which was 3% nationally, and jumped $3 per acre from $99 to $102. Cornbelt cropland rents climbed $3 per acre to an average of $152. IA farmers had to pay the highest average cash rent at $176 per acre, with IL at $169, and IN at $141. That is only a fraction of the cash rent paid in California of $345 per acre for irrigated cropland. The Appalachian region had the highest percentage increase for cropland, 7.6 percent above 2009. Cropland cash rents increased $2.50 per acre to $71.00 in the Northern Plains region.

The average cash rent paid for pasture in the Corn Belt region decreased $1.50 to $29.50 per acre, which is the highest cash rent paid for pasture in the United States. Pasture rents range from a high of $40 per acre in IA and $39 in IL, down to $13 per acre for North Dakota pastureland. Nationally, the least pasture rental rate is in New Mexico at $2.20 per acre.

While crop inputs were on the decline from 2009 into 2010, the cost of land and land rents did not follow the costs of energy, fertilizer and other inputs. USDA reports that both increased, both nationally and in the Cornbelt. While IL and IA led in most statistics, it should be noted that both land values and rents decline in MI and WI.

Posted by Stu Ellis on 08/09 at 01:02 AM | Permalink

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