The value of ag land and cash rent continues to increase across the U.S., highlighting the growing hurdles producers face in their endeavors to continue farming and ranching operations.
In USDA’s annual August Agricultural Land Values report, it noted the 2023 U.S. farm real estate value was up more than 7% over last year—a year that already saw record-breaking prices.
Farm real estate for 2023 averaged $4,080 per acre, up $280 per acre from 2022. Last year saw a record-breaking increase of $420 per acre, 12% over 2021. Cropland value for 2023 averaged $5,460 per acre, an increase of $410 per acre (8.1%) from last year. Pasture value averaged $1,760 per acre, an increase of 6.7% ($110 per acre) from 2022.
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“This annual report provides one of many indicators of the overall health of the agricultural economy and illustrates yet another heightened production cost and barrier to profitability faced by farmers and ranchers,” wrote Daniel Munch, American Farm Bureau Federation economist, in a Market Intel report.
The annual survey samples 9,000 1 square-mile segments of land to obtain statistics.
USDA also released its data on cash rents, which showed an increase alongside land values. Pastureland rents increased nearly 8% this year, reaching $15 per acre. Average cropland rent increased close to 5%, at $155 per acre. Irrigated cropland rents increased 4.4% to $237 per acre, and non-irrigated cropland rents increased more than 5% to $142 per acre.
“As pressures on open land intensify across the nation for residential and energy development, leasing cropland becomes less profitable,” Munch wrote.
Ag land value
Following 2022, this year had the second highest percentage increase in farm real estate value since 2014. Factors contributing to rising values include government program incentives to retire and conserve land, such as the Conservation Reserve Program, which have increased competition for active cropland, Munch wrote. In addition, urban sprawl and increased land investments have contributed to competition, and therefore higher land values.
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The northern Plains region (Kansas, Nebraska, North Dakota and South Dakota) saw the highest increase in land values at 13.7%. Kansas experienced the highest increase in the country, up 16.3% over last year, or to $3,160 per acre. A total of nine states saw double-digit percentage increases from last year, five of them in the Midwest.
In the West, California continues to have the most expensive farmland, at $12,400 per acre (a 3.3% increase from 2022). New Mexico has the least expensive farm real estate value, at $610 per acre (unchanged from last year).
The Corn Belt as a region has the highest average for farm real estate, at $8,100 per acre. This is followed by the Pacific (California, Oregon and Washington) at $7,270 per acre, although California skews the average much higher. Oregon and Washington averaged $3,180 and $3,190 per acre, respectively.
Cropland, pastureland
Cropland values were 8% higher over last year, with the northern Plains experiencing the highest increase over last year at 14.1% ($4,200 per acre). The Pacific and Corn Belt came out on top for most expensive cropland, with the Pacific averaging $8,800 per area (California at $15,880 per acre) and the Corn Belt at $8,540 per acre.
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While the West and Midwest face much higher-cost land for crops and overall farm real estate value, pastureland is the exception. “A very high percentage of grazeable land in the West is owned by the federal government, a portion of which is leased to ranchers using grazing permits,” Munch said. “These dynamics limit the role of real estate competition for pastureland in many Western states.”
Pastureland values were up nearly 7% across the U.S., with the northern Plains and the Appalachian regions showing the highest increases at 13.5% ($1,510 per acre) and 8% ($4,180 per acre), respectively. The Southeast and Northeast have the most expensive pastureland, at $5,050 and $4,460 per acre, respectively.
“In a continued 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 wrote.
He 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.”
