USDA’s latest Land Values 2022 Summary report, released in early August, shows that not only did the value of agricultural land in 2022 increase a whopping 12 percent, but it’s also the largest numerical increase since the survey first began in 1997.
The farm real estate value—the value of all land and buildings on farms—averaged $3,800 an acre for 2022, up $420 an acre from 2021. Cropland value averaged $5,050 an acre (an increase of $630 an acre, 14 percent), and pasture value averaged $1,650 an acre (an increase of $170 an acre, 11.5 percent).
Farm real estate value
The American Farm Bureau Federation (AFBF) said in a Market Intel report that price increases in farm real estate value can be attributed to the rise in commodity prices that have translated to a higher farming value for land in row crop-heavy states. Government incentives, such as Conservation Reserve Program incentives, have also increased competition for active cropland.
“Other factors contributing to rising land values include competing land use interests, which includes urban and suburban sprawl, and the increased investments into hard assets, like land, for a safer return on investment during a period of high inflation,” explained Daniel Munch, AFBF economist.
The Northern Plains states of Kansas, Nebraska, North Dakota and South Dakota saw the largest increase in farm real estate value, at nearly 20 percent. The average price per acre was $2,780. Kansas saw the largest percent increase, at 25 percent ($2,630 an acre).
The most expensive region for farm real estate was a close race between the Corn Belt and the Pacific, with averages of $7,560 an acre (15 percent higher) and $7,040 an acre (9.7 percent higher). However, the state of California’s average farm real estate value was disproportionately higher, at $12,000 an acre (10 percent increase).
The Southern Plains averaged an increase of 11 percent per acre, $2,560 higher. States in the Mountain region saw an increase of 8.6 percent an acre, at $1,390.
Cropland value
Cropland values followed the trend of farm real estate value, with the Midwest and Northern Plains seeing much of the increase in average acreage value. The Northern Plains saw an increase of nearly 20 percent per acre, averaging $3,680. The Corn Belt followed next, with cropland up 15 percent, or $7,930 an acre.
The Pacific region is still the priciest area for cropland, at an average of $8,580 an acre (an 11 percent increase). California comes out on top, with the average price of cropland at $15,410.
The Southern Plains saw a nearly 13 percent increase in cropland, at $2,310 an acre. The Mountain region saw an increase of 10.5 percent, or $2,320 an acre.
Pastureland value
The distribution of pastureland values across the country differed from the cropland and real estate values.
“With extended drought impacting 60 percent of the Western U.S., reducing the quantity of grazable land, demand for pastureland has increased,” Munch said. “This has increased pastureland prices more broadly but has targeted areas with less density of high value row crops and more regular precipitation such as the South and Midsouth.”
The Plains states saw the largest increase in pastureland value. The Northern Plains saw increases of 17 percent, $1,330 per acre, while the Southern Plains had increases of 13.6 percent, at $2,000 an acre.
The Midwest remains the most expensive region for pastureland at $2,760 an acre, up 9.5 percent. The Pacific region followed next, at $2,060 an acre (up 13 percent). The state of California continues to be one of the more expensive individual states, with pasture at $3,550 an acre (up 14.5 percent).
The Mountain region saw an increase of 9 percent, with the average acre costing $783.
“In a period of heightened input costs across the board further exacerbated by inflationary pressures, high rent and land costs are yet another hurdle for farmers and ranchers working to produce more crops and raise more livestock,” Munch concluded.
“Fortunately for producers who own land, their equity has increased, but for those just starting out or reliant on the acres they rent to make ends meet, these increases can become an unbreachable barrier to entry.” — Anna Miller, WLJ managing editor
