Cropland Values in the Central U.S. Show Strength in 2022
The Federal Reserve Bank of Kansas City recently reported the value of nonirrigated cropland in the Central Plains increased by more than 20% for the majority of the states in this region. The market value of nonirrigated cropland increased at the highest rate in the mountain states, at 32% (Kauffman & Kreitman, 2022a). Increases in the market value of land followed the rise in commodity prices for major crops grown across the Central Plains. Over the prior year, financing terms were also favorable for fixed-term interest rates. Policies implemented to combat the effects of COVID-19 on the economy lowered the cost borrowing for short- and long-term debt in the agricultural sector.
Disruption in global trade patterns, strong exports from the United States, and robust domestic demand were some of the major driving forces brining commodity prices back near record highs during the first half of 2022. Drought pressures in the western Corn Belt also remain a major concern. The U.S. drought monitor currently places almost 70% of Nebraska in moderate drought or worse (Riganti & Tinker, 2022). This concern also remains challenging for producers, as many critical inputs such as fuel, seed, fertilizer or chemicals necessary for crop production were significantly higher than the prior year.
Read more about the factors driving current land values in this Center for Agricultural Profitability article.