High commodity prices and farm income levels drove Nebraska agricultural land values to record heights in the last year, according to preliminary findings of an annual UNL survey.
The average statewide all-land average value of $1,833 as of Feb. 1 represents a 22% increase in the last 12 months from last year's average of $1,530 and a doubling since 2005, according to the annual UNL Nebraska Farm Real Estate Market Developments Survey.
While all classes of farmland posted large gains, the cropland categories led the way.
"That's a clear reflection of high income conditions for the state's crop sector over the past few years," said Bruce Johnson, the UNL agricultural economist who conducts the survey.
For the center-pivot cropland class, the average value increases have been especially strong for some time, with a doubling of average value in just the last five years. For the grazing land classes, the last year's advances are more moderate, since the state's livestock industry until recently has struggled economically.
Johnson noted that the Northeast, Central and South districts all saw overall gains of 25%. Preliminary values in the Northwest and Southwest Districts show more modest increases, with all-land gains of 12.3% and 13.9%, respectively. It's likely the smaller gains in those districts reflect the fact both have relatively large grazing land components.
This year marks the first time a land class in a district moved into the $6,000 range, as center pivot land in the East District was estimated at $6,175 per acre, up nearly 27% from 2010.
As in past years, reports from a panel of agricultural land experts were compiled for the survey. Those experts said 2011 "is a very unique time in agricultural land markets," Johnson said.
"They see higher income flows contributing greatly in the short run to dramatic upward advances," Johnson added. "They also note that while buyer demand is high, the availability for sale is very limited.
"Moreover, market participants, both current buyers and existing owners, are financially strong and not vulnerable at this point," he said. "Still, a general tone set by our reporters is that risk levels are moving upward, and it is a time to be very cautious."
Cash-rental rates also surged in the last year. Preliminary estimates show dramatic increases, including 15% to 25% generally in cropland. Pasture-rental rates are generally stable to slightly higher across most of the state.
Final figures for this year's report will be available this summer. For more information and a table of land prices see the Department of Agricultural Economics newsletter, Cornhusker Economics.
Source: Dan Moser, IANR News