By Dave Natzke
Add land values to the things on the decline in major U.S. dairy states. USDA’s 2009 Land Values and Cash Rents report shows the value of agricultural real estate, cropland and pasture declined in most dairy states, but rental rates held fairly steady (see Table 1, below).
U.S. farm real estate values, a measurement of the value of all land and buildings on farms, averaged $2,100 per acre on Jan. 1, 2009, down 3.2% from 2008 and the first decline in farm real estate value since 1987.
Regional changes in the average value of farm real estate ranged from virtually no change in the Northern and Southern Plains regions, to an 11% decline in the Mountain region. The highest farm real estate values remained in the Northeast, at $4,830/acre. The Mountain region had the lowest farm real estate value, $922/acre.
Among major dairy states, largest farm real estate declines (on a percentage basis) were in Idaho, Florida, California and Oregon.
Both cropland and pasture values are also down from the previous year. Cropland values declined by $110/acre (3.9%) to $2,650/acre. In the Corn Belt region, the average cropland value decreased 4.0%, to $3,870/acre. However, in the Northern Plains and Delta regions, cropland values rose 1.6% and 0.6%, respectively. Among major dairy states, largest cropland value declines (on a percentage basis) were in Arizona, Florida, Idaho and Virginia.
Pasture value declined by $20 per acre (1.8%) from 2008, to $1,070/acre. The Mountain region had the largest percentage decrease in pasture value, 16% less than 2008. Among major dairy states, largest pasture value declines (on a percentage basis) were in Idaho, Pennsylvania and Florida.
USDA economists cited the contraction in the overall economy for the declines, resulting in less commercial and residential development and recreational and in many regions. Livestock and crop commodity prices also declined from a year earlier, weakening producer and investor interest.
Nationally, cash rent for cropland rose 5.3%, while pasture rents remained unchanged for the 2009 crop and grazing year.
Cropland cash rents paid in 2009 averaged $90/acre, compared to $85.50/acre for 2008. Pasture cash rents averaged $10.50/acre, consistent with the 2008 average, but above the 2007 average of $10.00/acre. The increase in cropland rental rates are the result of producers receiving strong commodity prices, while pasture cash rent is affected less by commodity prices and more by land values.
The Northern Plains region had the highest percentage increase for cropland, 7.6% more than 2008. Cropland cash rents increased $9/acre, to $196/acre in the Pacific region; and $7/acre, to $146/acre in the Corn Belt region. The Corn Belt and Northern Plains regions account for nearly half of the cash rented cropland acreage in the United States.
The major corn and soybean producing states of Illinois, Indiana and Iowa experienced increases of 4.3%, 4.4% and 5.9% respectively, for cropland cash rents, averaging $170, $141 and $180 per acre, respectively.
To see USDA’s full report, Land Values and Cash Rents 2009 Summary, visit http://usda.mannlib.cornell.edu/usda/current/AgriLandVa/AgriLandVa-08-04-2009.pdf.
Numbers reflect bank trends
The values estimated in the USDA report reflect trends reported previously by economists in several Federal Reserve District banks. For DairyBusiness Communications summaries of the most recent quarterly updates, visit:
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