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Farmland costs proceed to rise in Nebraska, hitting document stage

United Farm & Ranch Administration has traditionally carried out most of its farmland gross sales within the months after harvest and earlier than planting season, usually October or November to April.

That is as a result of that is when farm homeowners have the time to consider shopping for or promoting land.

However over the previous couple of years, Chris Scow mentioned he has seen a noticeable change.

“We have form of had an lively gross sales market all by means of the 12 months,” mentioned Scow, managing dealer and operations supervisor of the corporate’s Lincoln workplace.

The demand for farmland that is driving year-round gross sales is also pushing costs to heights not seen in Nebraska historical past.

In keeping with ultimate outcomes from the College of Nebraska-Lincoln’s Nebraska Farm Actual Property Report, general farm costs within the state rose 16% this 12 months to $3,360 an acre, an all-time document. Values have been strongest within the northeast a part of the state, up 21%, whereas the northern area had the smallest improve of 11%.

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Farm land graphic #12328

The UNL report is definitely fairly conservative in its estimate of the rise in land costs within the state, nonetheless.

Scow mentioned gross sales his firm has been concerned with point out costs are up 20-25% in central and southeastern Nebraska, the place the most efficient cropland is situated.

A report from the Federal Reserve Financial institution of Kansas Metropolis estimated Nebraska’s fourth-quarter land costs have been up 31% for non-irrigated cropland, 21% for irrigated land and 23% for ranchland in contrast with a 12 months in the past.

Farmers Nationwide Firm, an Omaha-based farm administration and actual property agency, mentioned that the common value patrons paid for Nebraska farmland within the first half of the 12 months was $11,500 an acre, up greater than 30% from the primary half of 2021.

“Latest Farmers Nationwide Firm public sale gross sales display the power within the land market thus far in 2022,” mentioned Randy Dickhut, the corporate’s senior vice chairman. “Good land that was promoting for round $16,000 final fall offered for $19,000 to $21,500 per acre at firm auctions in March. This improve in costs is on high of a 15-30% leap in worth throughout most Grain Belt states in 2021.”

Whereas costs elevated strongly in each state throughout the 18-state footprint the place Farmers Nationwide operates, no state noticed as large of a acquire because the Cornhusker State.

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There are a variety of causes driving each demand and costs, together with increased crop costs, political and financial instability, elevated curiosity from traders and traditionally low rates of interest — a minimum of up till just a few months in the past.

The elevated curiosity from traders has come as conventional investments reminiscent of shares have seen a pointy decline in worth this 12 months.

Jim Jansen, an extension economist with UNL and co-author of the report, mentioned there was a renewed curiosity in all varieties of land due to the present financial uncertainty.

Farmland is usually a much less unstable asset than many different investments, and U.S. Division of Agriculture information exhibits that since 1970, farmland has averaged a 5.7% annual return.

“Individuals are land as a retailer of wealth,” mentioned Jansen, who is predicated on the Haskell Agricultural Laboratory in Harmony.

One funding agency that is bullish on Nebraska is Farmland Companions, a publicly traded actual property funding belief.

The corporate owns 32 farms in Nebraska, encompassing practically 7,400 acres. It has bought three of these farms this 12 months, together with two final month.

“Nebraska is a superb, fantastic place to farm, in order that’s driving worth strongly,” mentioned Paul Pittman, chairman and CEO of the corporate, which is the nation’s largest publicly traded REIT that focuses on farmland.

Farmland Companions’ two most up-to-date purchases have been in Hamilton County, and it paid $12,658 an acre for one farm and $13,842 an acre for the opposite farm.

“Land values in Nebraska are extremely sturdy,” Pittman mentioned, “particularly within the japanese half or third.”

Pittman’s view jibes with the UNL report, which exhibits that the east, northeast and southeast areas rank first, second and third for highest land values.

The massive query now could be whether or not the demand and the worth will increase are sustainable.

One factor to notice in regards to the numerous reviews is that many are primarily based on a time-frame that precedes the current sharp rise in rates of interest.

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Jansen mentioned rising rates of interest “would possibly average costs to an extent,” however different elements, reminiscent of excessive commodity costs, will hold the market “comparatively sturdy.”

Excessive commodity costs assist to maintain farmers in good monetary form, which suggests they tackle much less debt and are much less prone to be pressured to promote their farms, which might drive down costs.

After recording 75 farm bankruptcies in 2019 and 2020, Nebraska has had solely 22 within the 18 months since.

Scow of United Farm & Ranch administration mentioned he has seen only a few “stress gross sales,” by farmers over the previous couple of years.

“We’re not in that surroundings proper now,” he mentioned.

One other issue which may blunt the impact of rates of interest on farmland gross sales is that not that many gross sales are financed.

“Most of those farm transactions are carried out with money,” Pittman mentioned.

He’s a agency believer that costs will proceed to go up, largely attributable to continued demand for farmland together with a lowering provide of good-quality farmland to promote.

“I believe you may proceed to see values go up in a spot like Nebraska.”

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Attain the author at 402-473-2647 or

On Twitter @LincolnBizBuzz.


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