Report: Agricultural Land Values Decline an Average of 10%
Preliminary findings from the 2017 Nebraska Farm Real Estate Market Survey conducted by the University of Nebraska–Lincoln indicate that as of February 1, 2017, the weighted average farmland value declined by about 10% over the prior 12-month period to $2,805 per acre. This decline marks the third consecutive year of downward pressure totaling to approximately 15% for the weighted average farmland value in Nebraska. Farmland value peaked in 2014 at $3,315 per acre.
The southeast district saw the largest decline at 15% averaged across all land classes. The south and north districts, at 6% and 5% respectively, saw the smallest average declines. Other declines by district, averaged across all land classes, were: southwest (12%), central (11%), northeast (10%), east (9%), and northwest (8%).
Lower commodity prices in 2016-2017 and concerns about water resources were reported as key pressures on the ag land market and cash rental rates.
Jansen wrote "Survey participants expressed the availability of water for irrigation and policies guiding the utilization of this resource as potentially negative forces in the market value of these two land classes [gravity- and pivot-irrigated] into the future. Technological advancements in the application of irrigation water might be able to enhance the utilization of these resources and offset potential challenges."
Expenses related to owning land, including rising property taxes, were also a major factor reported as influencing rental rates.
The largest price declines by land classes, on a statewide weighted average, occurred in dryland cropland with irrigation potential at 13%, followed by tillable grazing land at 12%.
Dryland cropland without irrigation potential and nontillable grazing land reported the next highest rate of decline at about 10% across Nebraska, with the sharpest declines noted in the central, southwest, and south districts at about 15%.
For nontillable grazing land the highest rates of decline, ranging from 13% to 18%, were reported for the central, east, and southwest districts.
Center pivot irrigated cropland in the northwest, southwest, and southeast districts dropped 13% to 16%; other districts recorded declines of 5% to 7%.
Gravity irrigated cropland in the northwest and southeast districts followed similar double-digit deteriorations.
Irrigated cropland rental rates on average declined 5% to 10% across Nebraska. Eastern Nebraska districts along with the southwest district recorded the highest declines, ranging from 9% to 12% for center pivot irrigated cropland.
Pasture and cow-calf pair rental rates fell 5% to 15% across Nebraska.
The preliminary findings from the 2017 Nebraska Farm Real Estate Market Survey reported in the March 15, 2017 Cornhusker Economics, include ag land values and cash rental rates for eight districts in Nebraska plus a weighted state average. The districts, the same ones used by USDA Agricultural Statistics Service, are northwest, north, northeast, central, east, southwest, south, and southeast Nebraska.