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Among other factors, availability of irrigation water clearly is playing a more significant part in farmland values, said Bruce Johnson, the UNL agricultural economist who conducts the annual Nebraska Farm Real Estate Market Survey.
Statewide, Nebraska farmland's average value as of Feb. 1 was $1,013 per acre, up 9.6% over last year and up more than 33% since 2003's $757 per-acre average, according to preliminary results from the 2006 market survey.
The survey, which divides the state into eight regions, found that changes in land values range from a 15.5% increase in northeast Nebraska to a 4.2% decrease in the south region.
"In northeast Nebraska, the combination of several years of relatively favorable weather patterns and the positive income effect of a more diverse crop and livestock economy has, no doubt, fueled a spirited bidding environment for land," Johnson said.
"In southern Nebraska, the Republican River water controversy with Kansas has created uncertainty over both immediate and long-term water availability -- which, in turn, appears to be the primary explanation of recent cropland value declines," the Institute of Agriculture and Natural Resources researcher added.
"Clearly, water and its availability is becoming a critical variable in many local land markets around the state."
Southeast Nebraska saw the second highest increase in values -- 12.6%. "In this area, as well as eastern Nebraska, demand for land on the market is robust, with active farmer-buyers and nonfarm investor buyers," Johnson said.
Other changes include: northwest, 7.4% increase; north, 12.1% increase; southwest, 5.4% increase; central, 8.1% increase; and east, 10.1% increase.
Reflecting continued strength in the cattle economy, grazing land values were up across the state -- in most regions by double-digit margins. Grazing land values rose even in the south region, albeit by small margins.
Statewide, tillable grazing land values were up 13.2% to $464 per acre, the largest percentage increase by land class. The smallest increase statewide was in gravity irrigated cropland, with a 6% increase to $2,202 per acre.
Regional differences are especially telling in comparing values in the category of dryland cropland with irrigation potential. In regions most directly affected by irrigation-water restrictions -- the northwest, southwest and south -- values were stable to lower. "Some reporters even indicated that this class of land no longer exists in their markets due to moratoriums on further development," Johnson said.
In other areas, where water restrictions and well moratoriums are not yet in place, values of dryland cropland with irrigation potential actually are up sharply, Johnson said.
"Apparently, there may be conditions where premiums for this type of land are being paid to acquire it and develop it for irrigation before it, too, would be subject to water restrictions," he explained.
Preliminary estimates of 2006 cash-rental rates show a mixed picture. Cropland rents are up slightly in eastern parts of Nebraska and generally stable to down slightly elsewhere.
"Given significant jumps in crop input expenses in recent months," Johnson said, "some softness in cropland rents was expected across the board. However, strong demand for rental land in most local rental markets kept this from occurring."
Pasture rents are reportedly up this year, if not on a per-acre basis, then on an animal-unit-month basis, Johnson added.
Reports from a panel of agricultural land experts were compiled for this survey, which is conducted in cooperation with IANR's Agricultural Research Division. Final estimates will be available in a report this summer.
Dan Moser
IANR News Service
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| Published by University of Nebraska-Lincoln Extension in the Institute of Agriculture and Natural Resources Cooperating with the counties and the U.S. Department of Agriculture. | ||
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