Farmland values in eastern Kansas included for first time in long-running benchmark study
OMAHA, NEBRASKA - (July 27, 2015) - Farmland values in eastern Kansas rose nearly 3 percent in the first six months of 2015, while prices and demand for farmland continue to moderate in Iowa, Nebraska, South Dakota and Wyoming. The average value of farmland in Iowa and Nebraska declined during the first six months of 2015. In South Dakota and Wyoming, prices increased but at a slower rate compared to the last half of 2014.
For the first time, farmland values in eastern Kansas are included in the long-running benchmark study that Farm Credit Services of America (FCSAmerica) conducts each January and July. The addition of eastern Kansas is the result of a strategic alliance between FCSAmerica and Frontier Farm Credit and brings the number of benchmark farms tracked by appraisers to 71.
The average change in benchmark farm values is shown below:
|South Dakota (23)
|**The number of benchmark farms by state is shown in parenthesis.
As a whole, benchmark farms decreased in value 1.4 percent in the first half of 2015. The overall decline was driven by reduced prices for cropland. Pastureland in all five states, by comparison, increased, offsetting some of the impact of lower cropland values.
The change in value by land type is below:
|Six-Month Change in Value
The increase in pastureland values was the result of strong livestock prices. The overall decline in cropland values reflected lower grain prices compared to previous years. Profitability on higher priced land remains top of mind for many producers, and the lower grain prices and decreased margins will continue to put pressure on land prices, as well as cash rents. A 2015 survey from Iowa State reported a one-year decline of more than 5 percent in average cash rents for Iowa cropland. Iowa's average cash rent has dropped nearly 9 percent compared to 2013's high of $270 an acre.
The market decline that began in late 2013 has been widely reported, and many have looked for comparisons to the farmland crisis of the 1980s. But the two periods are distinctly different, said Mark Jensen, chief risk officer at FCSAmerica. In the 80s, high land prices accompanied by high borrowing levels resulted in over-leveraged operations with few financial remedies. Today, Jensen said, producers face a cash-flow challenge generally tied to higher cash rents and equipment and machinery costs and increasing family living expenses.
"FCSAmerica and Frontier Farm Credit have been working with customer-owners to evaluate options specific to their operations to help manage through this cycle of lower commodity prices and tight profit margins," Jensen said.
Other six-month benchmark farm trends, by state:
Iowa: Two farms increased in value during the past six months and two farms showed no change in value. The 15 farms that decreased in value declined an average of 6.1 percent.
Kansas: Four of the seven farms showed no change; three showed an increase in value. Benchmark farms in Kansas were appraised beginning in January 2015; historic trends will be available as each milestone year (i.e. 1, 5, and 10) is reached.
Nebraska: Five of the 18 farms increased in value, while two showed no change in value.
South Dakota: Nineteen of the 23 benchmark farm values increased or experienced no change.
Wyoming: Two benchmark farm values increased 6.8 percent.
For media and communications inquiries, please contact Judith Nygren, Corporate Communications & Public Relations Specialist, at 402.348.3346.