2014 Nebraska Farmland Values and Rental Rates

Cornhusker Economics July 2, 2014

2014 Nebraska Farmland Values and Rental Rates

The recently published Nebraska Farm Real Estate Market Highlights 2013-2014 report indicates as of February 1, 2014 the weighted average farmland value for the state rose by about 9 percent over the prior 12-month period to $3,315 per acre . Also, 2014 cash rental rates on average declined across Nebraska for dryland and irrigated cropland; while pasture and cow-calf pair rental rates significantly increased. Survey panel members indicated lower grain prices as the most negative factor influencing cropland rental markets and cattle prices as the most positive factor leading into record setting cow-calf pair rental rates. 

Since February 1, 2013 the largest percent increase in land value for Nebraska reported by survey participants occurred in hayland and grazing land (nontillable) classes at 26 and 24 percent respectfully. These two types of land are the primary classes that service the forage requirements of cow-calf producers in the state. Percent increase in value of these two land classes were generally greater than 30 percent for districts located in the western two-thirds of the state. Survey panel members indicated a very bullish outlook for future increases on the value of hayland and grazing land as many anticipate the prices of cattle to remain steady.

Changes in the value of dryland cropland in Nebraska also followed general trends observed for hayland and grazing land. Changes across the eastern third of Nebraska were generally less than 10 percent, whereas the western two-thirds generally  ranged  from about  20 to 30 percent. In the prior two to three years of the survey report, the increase in the value of dryland cropland has generally ranged between 20 to 30 percent for the eastern three districts. Survey panel members indicated one of the biggest concerns for dryland cropland (irrigation potential) is restrictions on developing ground water for irrigation. Future changes in the value of this land class will likely be tied to ground water policies guiding future irrigation development. 

Center pivot and gravity irrigated cropland for Nebraska increased an average of 6 and 3 percent respectfully over the prior 12-month period. The largest positive changes in irrigated land values occurred in the Northwest, North, Central, and Southwest Districts. The other districts recorded small changes in the value of irrigated cropland in 2014 suggesting the market is holding steady given current commodity prices and expectations. According to panel members, the center pivot and gravity irrigated land classes have the greatest estimated value of all of the land classes due to the revenue typically associated with this ground.

The current economic state of the grain and beef industry across Nebraska is being reflected in the changes in agricultural land rental rates. Anticipated lower grain prices for crops harvested in 2014 reduce profit margins for dryland and irrigated cropland. As a result, cropland rental rates declined about 5 to 15 percent on average from the record high set in 2013. Several instances exist where rental rates did increase over 2013 averages, but overall rental rates  declined across Nebraska for cropland. Panel members reported strong pasture and cow-calf pair rental rates correlating with higher cattle prices. Cases where pasture rental rates decreased may reflect lingering effects of the drought and the resulting lowering of stocking rates.

Survey results shown and discussed in this report are findings from the University of Nebraska - Lincoln 2014 Nebraska Farm Real Estate Market Survey. Land values and rental rates presented in this report are averages of survey panel members' responses by district. Actual land values and rental rates may vary depending upon the quality of the parcel and local market for an area. Complete results from the survey are available electronically via the Nebraska Farm Real Estate website: agecon.unl.edu/realestate

Land appraisers, farm managers, or agricultural finance professionals from Nebraska interested in participating in future Nebraska Farm Real Estate Market Surveys are invited to contact the Department of Agricultural Economics at the University of Nebraska - Lincoln. Interested parties can directly contact the Agricultural Economics Department by phone: (402) 472-3401 or email: agecon@unl.edu

Jim Jansen
Extension Educator
Cedar and Knox County Extension
University of Nebraska-Lincoln

Roger Wilson
Budget Analyst Farm Management
Dept. of Agricultural Economics
University of Nebraska-Lincoln