Price Discrepancy: Why have farmland values risen in only certain parts of the country?
Farmland values have risen sharply in recent years but only in certain parts of the country. A firm specializing in ag economy trends crunched the numbers to find out where the biggest changes have taken place.
Researchers at Ag Economic Insights took a look at changes in farmland values across rural America going back to 2020. Economist David Widmar says there is one area that stands out.
“There’s sort of a bullseye when you look at the middle of the country. Kansas stands out with a 42 percent increase in cropland values over those two years. That’s a huge change in equity, a huge change in asset values. And then, as you work your way out of Kansas, we see big changes in Nebraska, South Dakota as well, also Iowa, and then we see the rest of the Corn Belt.”
They found farmland values increased at a much smaller rate in other parts of the country.
“Throughout other parts of the country, we’ve seen increases over those last few years in all the states but areas in the southwest like Arizona or places in the southeast like the Delta States have seen much more modest increases. For example, nine percent increases in Louisiana compared to 42 percent over the last few years in Kansas, so increases across the board, but the story hasn’t been consistent.”
Widmar did find some surprises, however.
“I think the magnitudes are what’s surprising; maybe not the fact that there is a differential, but the magnitude is what’s really big. For example, South Dakota, in 2010, and 2022, had a 7.9 percent annual increase in those cropland values, so less than every decade, those values are doubling, and South Dakota’s on the high end of the extreme. But if we go to Arizona or New Mexico, both of those have had a less than one percent annualized rate of increase.”
When the group took a look back over the last decade, farmland values accelerated most between 2020 and last year.
“Those farmland values have gone up over the last decade, but most of those appreciations are from the last two years. And so, that differential, I think, is what’s surprising even when you move around the Great Plains. So, we had some point 7.9 percent in South Dakota but had 3.7 percent in Texas. So yes, agriculture is different. Yes, geography is different, but you can see some pretty big differences just moving around states that maybe your neighbors or maybe seem like they’d be in a similar region.”
According to the National Ag Statistics Service, farmland values averaged $3,800 per acre last year, which is up more than 12 percent from 2021.
Around the same time as this study, U.S. pasture values increased 11.5 percent, bringing those values to about $1,650 per acre.