On August 5th the USDA published its annual Land Values Summary Report. Today we review the trends in land prices nationwide and in Texas.
Dates & Deadlines
8/19-20/2022 – Texas Sheep & Goat Expo, San Angelo
8/26/2022 – Reduce Winter Feeding with Stockpiled Forage and Winter Pasture, AgriLife Online
8/30/2022 – Randall County Crops Tour, Canyon
9/12/2022 – Hemphill County Mini Ag Conference, Canadian
9/15/2022 – Caprock Cattle Conference, Muncy
What We’re Reading
Resources available for rural mental health assistance – Southwest Farm Press
Producer Owned Beef announces $670 million facility in Amarillo – Amarillo Globe News
Inflation Reduction Act passes with ag climate investments – Southwest Farm Press
Airlines to benefit from farmer fuels – Southwest Farm Press
Proposed Sustainability Disclosure Rules Draw Comments and Concerns – The Wall Street Journal
Senate bill expands local meat processing – BEEF
USDA 2022 Land Values Summary
On August 5th USDA NASS released its annual Land Values Summary. The publication reports on survey results of average farmland, cropland, and pasture values across the country. The top line results; farmland values increased 12.4% from 2021-2022, nationwide. An increase of 12.4% year over year nearly doubles the rate of increase in value from 2020-2021, and represents that greatest annual increase in value since prior to 2008.
Average Farm Real Estate Value – United States: 2008-2022
Regionally, the Northern Plains (Kansas, Nebraska, North Dakota, South Dakota) saw the greatest increase in value, with average all-farmland values rising 19.8% year over year. Specifically, Kansas all-farmland values rose 25.2% from 2021-2022. At the opposite end of the spectrum, all-farmland values in the delta states (Arkansas, Louisiana, Mississippi) only rose 5.0% year over year.
Cropland value and pasture value, as components of all-farm values, rose considerably. Nationwide, cropland rose 14.3%, from $4,420/acre to $5,050/acre from 2021-2022. During the same period, pasture values rose 11.5%, from $1,480/acre to $1,650/acre. Both series independently saw their greatest year over year change since prior to 2008.
Average Cropland Value – United States: 2008-2022
Average Pasture Value – United States: 2008-2022
Texas’ land values climbed along with the rest of the country. Texas cropland values rose 12.6% from $2,150/acre to $2,420/acre, on average. Irrigated and non-irrigated cropland rose at approximately the same rate, just over 12%. Irrigated cropland values in Texas rose to $2,850/acre and non-irrigated cropland rose to $2,350/acre. Pasture values in Texas rose slightly quicker than cropland values. Pasture values in Texas rose 13.9% from $1,800/acre to $2,050/acre. The change in Texas’ pasture values surpassed the national average, with average pasture values climbing only 11.5%, nationwide.
Why the sudden surge in values? With land values historically climbing at a fairly steady rate for almost a decade, why the sudden increase in 2021 and 2022? As with many economic trends over the last two years, COVID had an outsized impact on these markets. Migration from cities to rural areas is certainly having some impact, with populous states on the coasts seeing outward migration. Aggregate real estate trends suggest that Florida, Texas, and Tennessee saw an influx of population, with DFW ranking as one of the top destinations for transplants. The movement of populations alone has an impact on land values. It may also explain the more rapid increase in pastureland values. Keep in mind that research does not exist to support this argument, however it seems plausible that transplants without farming experience are more likely to purchase into pastureland than directly into large scale farming. The breakup of large tracts into ‘ranchettes’ is also typically associated with increasing values.