Farm real estate values, a measurement of the value of all land and buildings on farms, averaged $1,900 per acre on January 1, 2006, up 15% from 2005. The $1,900 per acre is a record high and $250 more than a year earlier, according to USDA's latest Land Values and Cash Rents.
Cropland and pasture values rose by 13 and 22%, respectively, since January 1, 2005. Cropland values averaged $2,390 per acre and pasture values averaged $1,000 per acre on January 1, 2006, compared with $2,110 and $820 per acre, respectively, a year earlier.
The increase in farm real estate values continues to be driven by a combination of mostly nonagricultural factors, including relative low interest rates and strong demand for nonagricultural land uses. Demand for farm real estate as an investment continues to be a strong market influence.
Regional increases in the average value of farm real estate ranged from 8.9% in the Delta region to 35% in the Mountain region. The highest farm real estate values are in the Northeast region, where urban influences have pushed the average value to $4,550 per acre. In the Corn Belt region farm real estate values rose 12%, to $3,040 per acre. The Northern Plains region, with its expanse of pasture and rangeland, had the lowest farm real estate value, at $834 per acre.
The Southeast region had the highest average increase in cropland value, at $4,550, up $890 per acre. In the Corn Belt region cropland values rose 12%, to $3,230 per acre. The Lake States region also increased 12%, to $2,550 per acre. Together, the Corn Belt and Lake States regions account for nearly one-third of the U.S. total cropland acres.
The Southeast region had the highest average increase in pasture value, up $1,510 per acre. In the Northern Plains, Southern Plains, Mountain, and Pacific regions (17 western states) pasture values per acre increased 15%, 24%, 54%, and 13%, respectively. Together, the 17 western states account for about 89% of the total pasture acres on farms in the 48 States.
Cash rent is higher
Nationally, cash rents per acre paid to landlords for cropland rose 1.3% while pasture rents increased 4.9% for the 2006 crop and grazing year. Cropland cash rents paid in 2006 averaged $79.00 per acre, compared with $78.00 per acre for 2005. Pasture cash rents averaged $10.80 per acre, 50 cents higher than 2005. The increases in cropland and pasture rental rates continue to reflect producers' optimism following the combination of high production and price levels of major U.S. agricultural commodities in 2005.
Cropland cash rents reported in 2006 increased in all regions except the Appalachian, Delta, and Southern Plains regions where rental rates declined marginally. Appalachian cropland cash rents declined by $2.00 from $58.00 to $56.00 per acre in 2006. Delta cropland cash rents decreased by $1.00 per acre to $69.50 in 2006 while cropland cash rents in the Southern Plains decreased by $1.50 to $29.00 per acre for 2006. Cash rents for cropland in the Southeast region at $48.00 per acre remained unchanged from last year. The Corn Belt and Northern Plains regions, which together accounted for slightly more than one half of cash-rented cropland acreage, increased 1.7% and 0.9% respectively from 2005. Cropland cash rents increased $2.00 per acre to $119.00 in the Corn Belt and 50 cents per acre to $53.50 in the Northern Plains.
The major corn and soybean producing States of Illinois, Indiana, and Iowa experienced increases ranging from 1.5 to 2.3% for cropland cash rents. Illinois and Iowa cropland cash rents averaged $132.00 and $133.00 per acre, respectively.
Cash rents for pasture land increased in all regions except the Southern Plains. Pasture cash rents increased by $1.00 per acre to $20.00 in the Southeast and by $2.00 per acre to $26.00 in the Northeast region. In the Northern Plains and Southern Plains regions, which account for two-thirds of the cash-rented pasture acreage, changes were marginally higher and lower, respectively. Northern Plains cash rents for pasture increased 50 cents per acre to $12.50 while cash rents for pasture decreased by 20 cents per acre to $8.20 in the Southern Plains. Wisconsin, at $38.00 per acre and unchanged from 2005, continues to lead the Nation with the highest per acre pasture rent.