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The Current Situation on Farmland Values and Ownership

12 June 2013 by Land Commodities in
Summary: Farmland values are increasing at rates not seen since the 1970s. Two recent land value surveys reported a 22% increase in Nebraska from February 2010 to February 2011, and prices up 25% in Iowa from March 2010 to March 2011. (Johnson, Wilson, and Van Newkirk, 2011; Iowa Farm and Land, Chapter 2, 2011) Other surveys have reported double digit increases in farmland values throughout the Midwest and Great Plains states. (Federal Reserve Bank; Schnitkey, 2011)

Soaring farmland values have led many people to raise the question of whether or not farmland is on a speculative ‘bubble’ and due for a price correction. The rapid increases in land values during the 1970s were followed by considerable personal, financial and social disruption when the values collapsed in the early 1980s. The 1970s was a truly unique and unprecedented period in U.S. history. Starting in 1972, real farmland values in the United States rose more than 7% a year for 10 consecutive years. In comparison, real land values in the United States rose 3.2% annually from 2005 to 2010 as farmland values fell during the recession in 2009.Over the past year, farmland values have rebounded, but questions regarding the sustainability of these elevated land values remain. This paper discusses current farmland value trends and the changes in farmland ownership.

Strong economic fundamentals—rising incomes and a limited number of farms for sale—appear to be driving recent land price gains. In addition, much of the farmland is owned by older farmers with little intent to sell. Farmland values will be shaped by economic returns and the highly volatile markets make the future path of farmland values very uncertain.

Authors Michael Duffy
Institution Agricultural & Applied Economics Association
Date 2011
Categories Farmland Values, Agricultural Assets
Countries United States

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