July 12, 2013

Farmland values increased in the Panhandle over the last year, but not as much as they did statewide, according to a report from the University of Nebraska-Lincoln.

The Institute of Agriculture and Natural Resources’ Agricultural Economics Department released the Nebraska Farm Real Estate Market Highlights report in late June, publishing the results of the annual Nebraska Farm Real Estate Survey. Farmland values increased across the state by an average of 25% in 2013, to $3,040 per acre. However, in the Panhandle, the average land value increased 13% from 2012 to 2013, to $715 per acre.

Land Values Increasing

The value of land can be largely attributed to its productivity; land classes with higher potential profit have greater values. Several factors have contributed to rising land values including record high farm income, low interest rates, operation expansion, and limited land availability.

Some indicators show that Nebraska cropland prices may have reached their current peak and could decline in the future. Expected return on investment for state average irrigated land fell below 3.5 percent for the first time in 23 years. Decreasing expected rates of return and increasing interest rates have the potential to reduce future land values.

Land Purchases

Sixty-four percent of land purchases in the Panhandle were made in cash, indicating that producers are reinvesting farming profits into operation expansion. The majority of purchases, 64%, were by active farmers or ranchers. Nevertheless, the Panhandle had the highest percentage of out-of-state buyers at 21%. Fifty-seven percent of land sold in the Panhandle was pasture, 22% dryland cropland and 21% irrigated cropland.

Rental Rates

Rental rates also increased in the Panhandle in 2013. Drought conditions hampered dryland cropland values, which only increased 3% over 2012, to $40 per acre. Larger increases in irrigated land in 2013 were supported by valuable supplemental water for crops. Center-pivot irrigated cropland is renting on average for $225 per acre, a 13% increase. Pasture rent remained at constant from 2012 to 2013 at $13 per acre.

For more information, see the full 2012-2013 Nebraska Farm Real Estate Market Highlights

Jessica Johnson
Extension Educator – Ag Economics