Ohio cropland values increased in 2012 and are expected to continue on an upward trend in 2013, despite drought, an Ohio State University Extension expert says.
Ohio cropland values rose 13.6 percent this year, with bare cropland averaging $5,000 an acre, said Barry Ward, production business management leader for OSU Extension. Ward, citing statistics from the Ohio Agriculture Statistics Service, expects the trend to continue next year, with “projected budgets for Ohio’s primary crops for 2013 showing the potential for strong profits.”
This is true, he said, despite the 2012 drought that devastated growers and producers across the country, particularly in the Midwest, including Ohio.
“We’re expecting the potential for profitability (next year) with corn looking like it will be king again,” Ward said. “We’ll have farmers with strong balance sheets, which will drive land values as well. With those strong balance sheets in spite of the drought, many farmers will continue to be in the land buying mode.”
Ward spoke Dec. 3 during the kickoff of the Ohio State University College of Food, Agricultural, and Environmental Sciences’ 2013 Agricultural Policy and Outlook series. The event initiates a series of county meetings to be held statewide next year. Dates and times for the meetings will be announced later.
The Dec. 3 event featured presentations from experts from the college's Department of Agricultural, Environmental and Development Economics (AEDE), who discussed issues the food and agricultural community should expect in 2013, including information on policy changes, key issues and market behavior with respect to farm, food and energy resources, and the environment.
Because of the moderate to severe drought conditions many growers experienced, profit margins were highly variable, said Ward, who is also an AEDE assistant Extension professor.
But crop insurance indemnities will alleviate some of the revenue shortfalls and financial stress, he said, noting that the last five-year period has resulted in “some of the most profitable years in the last 50 years of crop production.”
“With many dollars and buyers chasing farmland, it isn’t surprising to see land values increase substantially in 2012,” Ward said. “Crop profitability along with low interest rates have been the primary drivers in the run-up in cropland values.”
Depending on land production capabilities, returns to land are projected to be $204 to $489 per acre for Ohio corn next year, he said. Returns to land for soybeans are projected to be $102 to $295, with returns to land for wheat projected at $122 to $288.
The projections are based on OSU Extension Ohio Enterprise Budgets, and assume current prices of inputs and present December and September and November 2013 forward contract prices, respectively, he said.
OSU Extension has a long history of developing enterprise budgets that can be used as a starting point for producers.
The budgets are downloadable Excel spreadsheets. Users can input their production and price levels to calculate their numbers. The budgets feature color-coded cells that allow users to plug in numbers to easily calculate bottom lines for different scenarios. Detailed footnotes are included to help explain methodologies used to obtain the budget numbers. The budgets also include a date in the upper right-hand corner of the front page indicating when the last update occurred.