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USDA Issues Farmland Values, Rents Report
USAgNet - 09/11/2017

In recent years, farm real estate has typically accounted for about four-fifths of the total value of U.S. farm assets. Farm real estate values have leveled off since 2014, after exhibiting rapid growth over the previous five years. USDA's Economic Research Service research examines trends in farmland values, and assesses the effects of both macroeconomic and parcel-specific drivers of farmland values.

Research findings indicate that, since 2009, U.S. farmland values have been supported by relatively strong farm earnings. However, there have been periods of imbalance in the past, including 2005-08 and the 1978-85 farm financial crisis. In addition to farm earnings, historically low interest rates contribute to the farm sector's current ability to support higher land values. After a slight decline in 2016, average U.S. farm real estate values rebounded in 2017, reaching $3,080/acre in nominal terms . The resilience in average farm real estate values has persisted, despite recent declines in sector-level farm income that followed a record high in 2013.

Regional variation in farmland values is significant, owing to general economic conditions, differences in the health of local farm economies, policy, and location-specific characteristics that affect the returns to farmland. In the Corn Belt, farm real estate values were over twice the national per-acre average in 2017, while values in the Mountain region were less than half the national average. Individual regions have also experienced different trends in appreciation in farm real estate values.

Over 2016-17, the Pacific and Southern Plains regions saw the highest rates of annual appreciation of 8.7 percent and 6.2 percent (to $5,370 and $2,050 per acre), respectively. In contrast, farm real estate values in the Northern Plains and Corn Belt, two major cash commodity production regions, continued their recent downward trend, with respective declines of 1.8 percent and 0.5 percent (to $2,200 and $6,260 per acre).

Farmland values also vary by land use. In 2016-17, national average cropland value held constant at $4,090/acre, while pastureland value ($1,350/acre) exhibited a minor uptick of 1.5 percent. Cropland has historically maintained a substantial land value premium over pastureland due to the higher per-acre returns associated with crop production.

Although cropland values are higher than pastureland values in each farm production region, considerable variation exists across the U.S. in the magnitude of the cropland/pastureland value disparity. For instance, the Southeast has the highest pastureland values in the Nation ($3,910/acre), leading to the smallest regional cropland/pastureland value differential (less than 1 percent). In contrast, cropland values in the Pacific region are nearly four times higher than pastureland values.

Annual farmland rents measure the value of using land for agricultural production in the current year. Similar to the national pattern for farmland values, cropland cash rents are much higher than pasture cash rents. Over 2016-17, average national cropland rents held constant, while pastureland rents declined by 4 percent.

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