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Presented by:Jessica Jo Johnson

Prepared by:T. Lemmons & A. Vyhnalek

Adapted from:B. Johnson. (2012). Nebraska Farm Real Estate Market Report. UNL

Extension

Current Land Values & Cash Rental Rates

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Land ValuesFactors

influencing Land Values

Rental Rates

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2012 Values and Recent Trends

$63522%

$242532%

$87524%

$133535%

$294535%

$3355 32% $4280 35%

$6080 31%

$4975 37%

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2011-2012 Values and Recent Trends by DistrictAgricultural

Statistics District

2011/2012 All-Land Average

ValueDollars/Acre

2010-2011% change

2011-2012% change

5 Year % change

Northwest 520/635 12.3 22 64

North 706/875 18.1 24 71

Northeast 3624/4975 25.1 37 132

Central 2183/2945 24.9 35 113

East 4625/6080 22.9 31 116

Southwest 991/1335 13.9 35 107

South 2535/3355 24.9 32 144

Southeast 3160/4280 21.7 35 120Entire State 1833/2445 22.0 32 120

Source: Annual UNL Nebraska Farm Real Estate Market Surveys Red – 2012 values

Know how. Know now.Know how. Know now.2011-2012 Values and Recent Trends by Land Class

Type of Land – Average Value Northwest North

2011/2012 2011/2012 % Change 2011/2012 2011/2012

% ChangeDryland Cropland - No Irrigation

Potential 545/660 21% 800/1050 31%

Dryland Cropland - Irrigation Potential 550/680 24% 1200/1625 35%

Grazing Land - Tillable 340/410 21% 740/880 19%

Grazing Land - NonTillable 280/330 18% 390/450 15%

Hayland 550/620 13% 785/950 21%

Gravity Irrigated Cropland 1980/2440 23% 2050/2625 28%

Gravity Irrigated Cropland 1975/2535 28% 2955/3970 34%

All Land Average 635/520 22% 706/875 24%

Source: Annual UNL Nebraska Farm Real Estate Market Surveys Red – 2012 values

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Land ValuesFactors

influencing Land Values

Rental Rates

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Perfect storm for land value increase

•Availability of Money – profits from farming•Low interest rates•Lack of land for sale•Returns on land are still favorable, even though declined

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(Source: USDA NASS, November 2012)

$1.72

$7.76

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$4.30 August 23rd, 2010

Corn – Dec 2012 Futures

$8.09 – August 6th, 2012

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Farm Commodity Prices

(Source: USDA NASS, November 2012)

$3.03

$9.84

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Wheat – March 2012 Futures

$9.62 – May 23rd, 2011

$6.57 - May 7th, 2012

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Ag Exports

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Ag Exports

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Farm Income and Expenses

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Nebraska Farm Income

7.4

6293

%

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Strength of Ag Sector

2012 Balance Sheet for the U.S. Farming SectorTotal Farm Assets: $2.47 trillionTotal Farm Debt: $254.1 billionTotal Farm Equity: $2.22 trillionDebt-to-Equity Ratio: 8.7%Debt-to-Asset Ratio: 9.7%

Source: ERS – USDA 2/2012

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Income Changes

Source: ERS/USDA with 2011 Forecasts UNL Estimates

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Annual Percentage of Agricultural Land Sold in Nebraska (2011-2012)

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Annual Percentage of Agricultural Land Sold by County (2011-2012)

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Land Summary• State-wide – just over 50% of land purchases, with cash• At Historic Highs• Global demand for food• Rates of return are still moderate• Most believe that values are being driven in part by

current producers expanding operations• Still going up? At Peak? or Declining? Depends on your

local market demand• BE CAUTIOUS!

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Land Values Factors influencing Land Values Rental Rates

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Value to Rent Multiple for Irrigated Cropland

19901992

19941996

19982000

20022004

20062008

201002468

10121416

7.16

13.67

5.06

11.42

Gravity Irrigated Northwest Center Pivot Irrigated Northwest

Valu

e to

Ren

t Mul

tiple

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Know how. Know now.Know how. Know now.Reported Cash Rental Rates:

Center Pivot Irrigated Cropland2012 Average % Change from

2011High Low

Northwest 200 17 235 155North 229 17 264 180Northeast 325 16 400 264Central 257 16 305 209East 313 15 377 257Southwest 236 22 285 205South 276 18 343 220Southeast 301 17 361 240Source: 2012 UNL Nebraska Farm Real Estate Market Developments Survey

Insufficient number of reports for Northwest Gravity Irrigated Reported Cash Rental Rates

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Reported Cash Rental Rates: PastureAverage % Change from

2011High Low

Northwest 13 18 17 9North 16 14 21 14Northeast 51 9 62 36Central 33 10 40 27East 41 11 50 32Southwest 15 7 21 13South 36 13 42 30Southeast 39 15 49 29Source: 2012 UNL Nebraska Farm Real Estate Market Developments Survey

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Cash Rent Summary• Cash rents clearly up recently – but don’t

always trend with land values (10% vs 30+%)

• Note Differences in numbers• NASS survey• UNL Cash Rent survey• Coffee Shop

• When does the ‘up’ trend end?

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Questions/Comments??

Thank You