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   from the issue of April 29, 2004

Value of ag land jumps, NU survey shows


Nebraska’s overall agricultural real estate market took its biggest leap in 14 years, according to the University of Nebraska’s 2004 Nebraska Farm Real Estate Market Survey.



Bullish conditions in the state’s agricultural land markets have fueled robust advances in both land values and cash rental rates for most of the state, said Bruce Johnson, agricultural economist in the university’s Institute of Agriculture and Natural Resources.

“A combination of favorable factors, including higher crop and livestock prices, low interest rates and strong demand from both farmers and non-farmer investors, has led to solid advances,” Johnson said.

As of Feb. 1, the preliminary statewide all-land average value was $827 per acre, up 9.2 percent from last year’s average of $757, which was up 1.1 percent from 2002.

Geographically, southeast Nebraska saw the biggest increase, with the preliminary all-land average up 12.5 percent to $1,354. Center pivot irrigated cropland in southeast Nebraska increased by 12 percent to $2,218 per acre. Dryland cropland value in the region with irrigation potential increased by 13.9 percent and dryland cropland without irrigation potential increased by 12.4 percent.

Northeast and eastern Nebraska had the highest all-land average values, up 9.6 percent to $1,388 per acre and up 8.1 percent to $1,999 per acre, respectively.

Regionally, 2004’s value changes probably are best understood in the context of the past two years rather than the last 12 months, Johnson said. With last year’s agricultural land markets stable to slightly down because of drought and low commodity prices, this year’s increases can be deceiving, especially in the southwest.

Although southwest Nebraska, which has experienced the state’s most severe drought, is up 7.1 percent, that increase only brings the figure up to the 2002 all-land average value of $500 per acre. It was down 8.4 percent to $467 per acre in 2003.

Northeast, east and southeast Nebraska have reported two-year gains in their all-land average of about 13 percent, Johnson said.

Statewide, dryland, irrigated, grazing and hayland values showed similar percentage gains during the 12-month period. The exception was gravity-irrigated cropland, which tended to show relatively smaller percentage gains across most of the state, Johnson said.

“Despite dry conditions in 2003, which cut dryland crop yields and contributed to higher production costs for irrigated crops, higher crop prices fueled more spirited bidding.”

Grazing land also saw sizable percentage gains for the year.

“A strong cattle economy prior to the bovine spongiform encephalopathy discovery at the end of December 2003 probably explains much of the solid gains in grazing land values across the state,” Johnson said.

As for 2004 cash rental rates, cropland demand has been strong in most areas and rates have gone up from a year ago. Even in drought-stressed western Nebraska, 2004 rents are steady to higher. Cash rental rates on dryland cropland in the eastern part of the state are up more than 5 percent from 2003 levels.

“However, the largest increase for dryland cropland, up 15.6 percent in the north, is somewhat of an aberration since dryland rents had fallen in that area the previous year,” he said.

Average rent for irrigated land showed the largest percentage gains in the north and northeast. The highest average rent exceeded $150 per acre for the first time ever in 2004 with center pivot irrigated cropland reaching $151 per acre in the east.

Grazing land rates also are up in 2004, both on a per acre basis and on a per animal unit month basis. These rate increases ranged from 4.3 percent in the south to 9.7 percent in the northwest. Per acre rental rates for alfalfa and other hayland classes also are higher for 2004.

Nearly 96 percent of Nebraska’s 49.5 million acres is agricultural land, split almost evenly between cropland and range or pasture.

Reports from a panel of agricultural land value experts were compiled for this survey, which is conducted in cooperation with IANR’s Agricultural Research Division. Final estimates will be available in an annual report out in June.



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