USDA Report On Midwest Farmland Values
CAI Auctioneer, Land Broker
Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from the World Wide College of Auctioneering, and has achieved the PRI designation from the Professional Ringmen Institute. Jason and his wife founded DreamDirt in 2005, and the company continues to be a leader in the farm auction space and prides itself in offering extensive land seller and buyer information.
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WHAT IS FARMLAND WORTH?
Recently, the USDA released an annual report summarizing farmland values for 2019. According to the report, the U.S. farm real estate value, a measurement of the value of all land and buildings on farms, averaged $3,160 per acre for 2019, which is up $60 per acre (1.9%) from 2018. The U.S. cropland value averaged $4,100 per acre, an increase of $50 per acre (1.2%) from the previous year, while the U.S. pasture value averaged $1,400 per acre, up $30 (2.2%) from 2018.
In terms of individual states, Iowa and Michigan farmland values saw declines; however, other Midwest states such as Illinois, Indiana and Wisconsin farmland values held steady. The higher average farmland value trend was seen in the northernmost Midwest states of North Dakota and South Dakota, although values and rates have decreased in Minnesota.
The reports did not disclose as to why average farmland values and rental rates rose at a time of lower crop prices and limited profits. Nor was it stated specifically the reasons for some states and regions to fall below average; but, many states were greatly hit with early onset heavy rains, flooding, and harsh winters leaving a larger negative impact.
In our opinion there tends to be a lag eﬀect between Iowa and surrounding states. Termed “the Iowa Eﬀect”, surrounding states’ land prices follow Iowa’s after 12-18 months. This seems to be the case here. In 2019 we’ve experienced an unprecedented crop year with widespread ﬂooding, MFP payments, a large crop insurance payout, and a mid-year $1 corn price boost.
Demand for Midwestern farmland has remained strong with the highest and best buyer being the farmer. We continue to see investor activity in the market. As many investment ﬁrms look at farmland and become more organized in their approach to farmland investment, it creates competition in the market that expresses itself in farmland values. This has been most noticeable over the last decade and changes the rules for the days where farmland prices were more closely tied to commodity prices.
MIDWEST STATES AND THEIR RESPECTIVE FARMLAND VALUES
Average Illinois cropland values are up 0.3% to $7,300 per acre. Average Illinois pasture values are down 0.9% to $3,170 per acre.
Average Indiana cropland values remained steady at $6,210 per acre. Average Indiana pasture values are up 0.8% to $2,450 per acre.
Average Iowa cropland values are down 0.4% to $7,260 per acre. Average Iowa pasture values are down 2.5% to $2,720 per acre.
Average Kansas cropland values are up 4.9% to $2,160 per acre. Average Kansas pasture values are up 5.3% to $1,390 per acre.
Average Michigan cropland values are down 0.2% to $4,500 per acre. Average Michigan pasture values are down 0.4% to $2,590 per acre.
Average Missouri cropland values remained steady at $3,490 per acre. Average Missouri pasture values are up 3.1% to $1,980 per acre.
Average Minnesota cropland values are down 2.8% to $4,810 per acre. Average Minnesota pasture values are down 2.9% to $1,700 per acre.
Average Nebraska cropland values are up 0.2% to $4,390 per acre. Average Nebraska pasture values are up 7.7% to $1,050 per acre.
NORTH DAKOTA FARMLAND
Average North Dakota cropland values are up 2.7% to $1,920 per acre. Average North Dakota pasture values are up 5.7% to $820 per acre.
Average Ohio cropland values are up 1.3% to $6,400 per acre. Average Ohio pasture values are down 0.6% to $3,350 per acre.
SOUTH DAKOTA FARMLAND
Average South Dakota cropland values are up 0.3% to $3,130 per acre. Average South Dakota pasture values are up 1% to $1,050 per acre.
Average Wisconsin cropland values are up 2.3% to $4,850 per acre. Average Wisconsin pasture values are up 2.2% to $2,310 per acre.
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Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from...