Wednesday, August 05, 2009

Farmland value down for first time in 20 years; big drop in Mountain states because of cattle market

The value of agricultural land in the U.S. fell last year for the first time in two decades, according to the Land Values and Cash Rents summary from the National Agricultural Statistics Service of the Department of Agriculture. The average value was $2,100 an acre, down 3.2 percent from last year.

NASS said the data "ranged from virtually no change in the Northern and Southern Plains regions to an 11 percent decline in the Mountain region. The highest farm real-estate values remained in the Northeast region at $4,830 per acre. The Mountain region had the lowest farm real estate value, $922 per acre." Lauren Etter of The Wall Street Journal notes, "The Mountain states have seen bigger declines largely because of the prevalence of livestock. Cattle ranchers have been struggling amid low cattle prices and high feed prices."

More broadly, "Farm real-estate values had been climbing steadily over the past decade, reaching record levels last year amid soaring grain prices and a growing interest in using corn and soybeans for biofuels," Etter writes. "The rural boom also attracted speculators and investors looking to profit from the rise in land prices across the Farm Belt. But a deflation of the commodity markets and the overall wilting of the economy are now trickling down to the farm."

"People will probably see it as a positive sign that there is rationalization in the markets," Douglas R. Stark, president and CEO of Omaha-based Farm Credit Services of America, told Etter. (Read more)

No comments: