We have seen some ridiculous land price changes over the past couple of years for farm ground in Nebraska, across the Midwest and all across the Unite States.
Agricultural production is a major use of land, accounting for around 51 percent of the U.S. land base (USDA, Economic Research Service). Land use and land-use changes have important economic and environmental implications for commodity production and trade, open space, soil and water conservation, air quality and atmospheric greenhouse gas concentrations, and other areas of interest.
Changes in farmland values also affect the financial well-being of agricultural producers, because farm real estate is the largest single component in a typical farmer's investment portfolio and it serves as the principal source of collateral for farm loans.
However, with the change in commodity prices, land also ebbs and flows. Farmland values declined in parts of the Midwest for the first time in decades last year, reflecting a cooling in the market driven by two years of bumper crops and sharply lower grain prices, according to recent Federal Reserve reports. We’ve seen a steady decline this this value from the highs in December 2012.
How do U.S. farmland values compare to land values around the world? I found an interesting infographic from the Irish Farmers Journal.
While the graphic is in Euros (and it’s hard to convert this currency in one’s head!), this chart shows the values in U.S. dollars:
While this doesn’t separate farm from commercial or other other land value, it’s interesting to note that U.S. has one of the lower average land values.
On March 4, Cornhusker Economics put together the 2015 Trends in Nebraska Farmland Value and Rental Rates report. They noted that trends in agricultural commodities across Nebraska from 2014 leading into 2015 were marked by record-setting cattle markets along with lower grain and oilseed prices. Movements in the value and rents of the types of land which support these commodities reflect their general price trends. The decline in weighted average farmland values in Nebraska denotes the first decline in recent years of the survey.
Where do you forecast land values and commodity prices going this year?
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